N-CSRS 1 wbf_ncsr.htm N-CSR wbf_ncsr.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies

Investment Company Act File Number: 811-05104



Capital World Bond Fund, Inc.
(Exact Name of Registrant as Specified in Charter)

333 South Hope Street
Los Angeles, California 90071
(Address of Principal Executive Offices)




Registrant's telephone number, including area code: (213) 486-9200

Date of fiscal year end: September 30

Date of reporting period: March 31, 2008





Kimberly S. Verdick
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(Name and Address of Agent for Service)


Copies to:
Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, 25th Floor
Los Angeles, California 90071
(Counsel for the Registrant)


 
 
 

ITEM 1 – Reports to Stockholders

[logo - American Funds®]

The right choice for the long term®

Capital World Bond Fund
 
[photo – two girls in school uniforms holding hands while crossing stepping stones in a pond]
 
Semi-annual report for the six months ended March 31, 2008

Capital World Bond Fund® seeks to maximize long-term total return, consistent with prudent management, by investing primarily in a global portfolio of investment-grade bonds denominated in U.S. dollars and other currencies. The fund may also invest in lower quality, high-yield debt securities.

This fund is one of the 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For more than 75 years, Capital Research and Management Company,SM the American Funds adviser, has invested with a long-term focus based on thorough research and attention to risk.

Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 3.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity. For current information and month-end results, visit americanfunds.com.

Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2008:

   
1 year
    
5 years
    
10 years
  
Class A shares
                  
                   
Reflecting 3.75% maximum sales charge
     7.76 %     7.85 %     6.72 %

The total annual fund operating expense ratio for Class A shares as of the most recent fiscal year-end was 0.98%. This figure does not reflect a fee waiver currently in effect; therefore, the actual expense ratio is lower.

The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect actual expenses, with the waiver applied. Fund results would have been lower without the waiver. Please see the Financial Highlights table on pages 24 to 27 for details.

Results for other share classes can be found on page 4.

The return of principal in bond funds is not guaranteed. Bond funds have the same interest rate, inflation and credit risks that are associated with the underlying bonds owned by the fund. High-yield and lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in bonds issued outside the U.S. may be subject to additional risks. They include currency fluctuations, political and social instability, differing securities regulations and accounting standards, higher transaction costs, possible changes in taxation and illiquidity. For more complete information, please read the prospectus.
 
 
Fellow shareholders:
 
[photo – three girls in school uniforms holding hands while crossing stepping stones in a pond]
 
Capital World Bond Fund generated solid absolute returns in the first half of the 2008 fiscal year, providing both income and a measure of share appreciation.

For the six months ended March 31, 2008, the fund produced a total return of 6.9%. Shareholders received quarterly dividends totaling 87 cents a share, and realized a capital gain of six cents in December. This represents an income return of 4.3%, equivalent to 8.6% annualized.

The fund’s total return lagged the unmanaged Lehman Brothers Global Aggregate Index, which returned 10.1% for the six months. The fund’s total return exceeded that of its peer group, the Lipper Global Income Funds Index, which returned 5.0%.

Despite falling behind the Lehman index’s return over the past six months, Capital World Bond Fund continues to sustain its advantage over longer periods, as the table below shows.

Results at a glance

For periods ended March 31, 2008, with all distributions reinvested
                        
                         
   
Total returns
    
Average annual total returns
  
   
1 year
    
5 years
    
10 years
    
Lifetime1
  
                         
Capital World Bond Fund
                        
(Class A shares)
     11.98 %     8.67 %     7.13 %     7.83 %
                                 
Lehman Brothers Global
                                
Aggregate Index2
     15.25       7.32       6.64       7.80  
                                 
Lipper Global Income Funds Index
     8.60       6.63       5.56       — 3
 
 
1Since August 4, 1987.
 
2This index did not exist until December 31, 1989. For the period August 4, 1987, to December 31, 1989, the Citigroup World Government Bond Index (formerly the Salomon Brothers World Government Bond Index) results were used. Market indexes are unmanaged and include reinvested dividends, but do not reflect the effect of sales charges, commissions or expenses.
 
3This index did not exist prior to December 30, 1988.

Global economic issues
During the six months, economic growth in the United States slowed considerably, due in large part to ongoing troubles in the real estate market and higher inflation eroding consumers’ purchasing power. The sharp decline in prices of securities tied to mortgages led to disruptions in both domestic and global financial markets. There was a substantial flight to quality during the period, so while corporate bond yields rose in many cases, there was a sharp fall in Treasury bond yields. (As a bond’s yield falls, its price rises, and vice versa.) Ten-year Treasury yields ended the period at 3.4%, down from 4.6% at the beginning of the fiscal year.

With the U.S. economy slowing, the Federal Reserve took major steps to mitigate a more severe disruption of the financial system and the possibility of recession. The Fed has cut the federal funds rate six times since the start of the fund’s fiscal year, taking the nation’s benchmark interest rate from 4.75% to 2.00%, and arranged the rescue of Bear Stearns, a large New York investment bank. This has served to somewhat stabilize the financial markets in the short term, but uncertainties remain regarding the strength of the U.S. economy.

In Europe, most banks fell prey to funding concerns similar to those troubling U.S. banks. For its part, the European Central Bank (ECB) was proactive in providing assistance to European banks through special financing arrangements, but in contrast to the United States, its key interest rate has remained steady at 4% since June. That has had the supplemental effect of strengthening the euro against the weakening dollar.

The Bank of England, on the other hand, initially was hesitant in providing special support to U.K. banks, despite the failure of Northern Rock, a bank heavily involved in the mortgage market. Ultimately, the Bank of England reduced its key interest rate from 5.75% to 5.25% during the first six months of the fund’s fiscal year.

U.S. investors in non-dollar-denominated bonds profited from appreciation in most European currencies against the falling U.S. dollar. Over the six months, the euro rose 11% against the dollar. With about 44% of net assets invested in European bonds, Capital World Bond Fund was well-positioned to benefit from those currency gains.

The dollar’s continued weakness bolstered other returns as well, particularly from Japan. The Japanese economy has also slowed, leading the Bank of Japan to back off from a gradual climb in interest rates.

Developing market bonds, which account for roughly 14.6% of net assets, had mixed returns during the period. Returns from Malaysia, Poland and Singapore were strong, for example, but the fund’s return was hurt by poor showings from Turkish, Indonesian and South African bonds.

Among sectors, government securities saw stronger returns than most corporate bonds, given the financial market conditions described earlier in this letter. As of March 31, about 22% of the fund’s net assets were held in global corporate debt across a wide range of industries; lower rated corporate bonds accounted for about 5% of net assets.

Global positioning
It is difficult to say what may happen to global bond markets over the next six months. The biggest question mark remains the United States, specifically the length and severity of the current economic downturn. The other major question is how much the U.S. economic slowdown will spill over into other global bond markets. So far, many markets have shown resilience, but a prolonged slowdown will put that resilience to the test.

One of the strengths of Capital World Bond Fund is its diversity, both in terms of geography and asset classes. The fund has the flexibility to act decisively in difficult times, taking advantage of interest rate differentials and currency movements around the world that we believe may benefit shareholders. The fund invests in more than 451 issuers denominated in 25 currencies and from 54 countries as it pursues its total return objective.

Cordially,
 
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Vice Chairman of the Board
 
/s/ Mark H. Dalzell
Mark H. Dalzell
President
 
May 12, 2008

For current information about the fund, visit americanfunds.com.

The fund’s 30-day yield for Class A shares as of April 30, 2008, calculated in accordance with the Securities and Exchange Commission formula, was 4.09% (4.05% without the fee waiver). The fund’s distribution rate for Class A shares as of that date was 4.82%. Both reflect the 3.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.

 
Other share class results

Class B, Class C, Class F and Class 529

Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.

Average annual total returns
              
Life
  
for periods ended March 31, 2008:
  
1 year
    
5 years
    
of class
  
                   
Class B shares — first sold 3/15/00
                  
Reflecting applicable contingent deferred sales charge
                  
(CDSC), maximum of 5%, payable only if shares
                  
are sold within six years of purchase
     6.15 %     7.56 %     7.63 %
Not reflecting CDSC
     11.15       7.86       7.63  
                         
Class C shares — first sold 3/15/01
                        
Reflecting CDSC, maximum of 1%, payable only if
                        
shares are sold within one year of purchase
     10.13       7.81       8.37  
Not reflecting CDSC
     11.13       7.81       8.37  
                         
Class F shares* — first sold 3/16/01
                        
Not reflecting annual asset-based fee charged by
                        
sponsoring firm
     11.97       8.68       9.31  
                         
Class 529-A shares† — first sold 2/15/02
                        
Reflecting 3.75% maximum sales charge
     7.70       7.80       9.83  
Not reflecting maximum sales charge
     11.91       8.64       10.52  
                         
Class 529-B shares† — first sold 2/25/02
                       
Reflecting applicable CDSC, maximum of 5%, payable
                        
only if shares are sold within six years of purchase
     5.97       7.40       9.64  
Not reflecting CDSC
     10.97       7.70       9.64  
                         
Class 529-C shares† — first sold 2/28/02
                        
Reflecting CDSC, maximum of 1%, payable only if
                        
shares are sold within one year of purchase
     10.01       7.72       9.67  
Not reflecting CDSC
     11.01       7.72       9.67  
                         
Class 529-E shares*† — first sold 5/16/02
     11.56       8.26       10.03  
                         
Class 529-F shares*† — first sold 9/17/02
                        
Not reflecting annual asset-based fee charged by
                        
sponsoring firm
     12.18       8.69       10.14  
                         
*These shares are sold without any initial or contingent deferred sales charge.
                        
† Results shown do not reflect the $10 initial account setup fee and an annual $10 account maintenance fee.
                        
 
The fund’s investment adviser waived 5% of its management fees from September 1, 2004, through March 31, 2005, and increased the waiver to 10% on April 1, 2005. Fund results shown reflect the waiver, without which they would have been lower. Please see the Financial Highlights table on pages 24 to 27 for details.

For information regarding the differences among the various share classes, please refer to the fund’s prospectus.

Portfolio summary as of March 31, 2008
unaudited
 
[begin pie chart]
Portfolio by type of security (as a percent of net assets)    
     
Bonds & notes of governments & government agencies outside the U.S.
     53.9 %
Corporate bonds & notes of issuers outside the U.S.
     13.7  
U.S. corporate bonds & notes
     8.4  
U.S. Treasury bonds & notes
     4.0  
Mortgage- and asset-backed obligations
     10.5  
Bonds & notes of U.S. government agencies
     0.9  
Other securities
     2.2  
Short-term securities & other assets less liabilities
     6.4  
[end pie chart]

Where the fund’s assets are invested …
                        
… and how those markets have done over the past six months
                        
as of March 31, 2008
                        
   
 
                    
   
Capital World Bond Fund
    
Bond market total returns1
six months ended
March 31, 2008
  
                         
Currency weighting
  
Before forward
    
After forward
    
In local
    
In U.S.
  
by country:
  
contracts
    
contracts
    
currency
    
dollars
  
                         
United States2
     33.0 %     32.4 %     5.4 %     5.4 %
EMU3
     32.2       30.6       2.7       14.4  
Japan
     7.2       14.1       2.6       18.6  
United Kingdom
     4.2       2.0       2.6       0.1  
Australia
     2.9       1.2       2.8       5.9  
Malaysia
     2.8       2.8       1.9       8.6  
Sweden
     2.8       2.4       2.9       12.3  
Israel
     2.3       1.4       — 4     — 4
Singapore
     2.2       2.8       3.4       11.4  
Poland
     2.0       2.0       0.9       20.6  
Mexico
     1.6       1.3       6.1       8.8  
South Korea
     1.0       0.6       4.0       –3.9  
Denmark
     1.0       1.0       2.9       14.7  
Turkey
     1.0       0.8       3.7 5     –6.0 5
Egypt
     0.9       0.9       3.8 5     6.5 5
Brazil
     0.7       0.7       1.6 5     6.9 5
Norway
     0.6       0.5       3.9       10.8  
Indonesia
     0.6       0.6       –7.6 5     –8.2 5
Canada
     0.3       0.6       6.1       2.7  
Hungary
     0.2       0.2       –4.7       2.5  
Uruguay
     0.2       0.1       — 4     — 4
South Africa
     0.1       0.1       –1.7       –16.3  
Argentina
     0.1       0.1       7.3 5     6.8 5
Dominican Republic
     0.1       0.1       — 4     — 4
Switzerland
     — 6     0.7       1.9       20.3  
Colombia
     — 6     — 6     –2.0 5     8.3 5
                                 
1Source: Lehman Brothers Global Aggregate Index; Switzerland: Citigroup World Government Bond Index.
        
2Includes U.S. dollar-denominated bonds of other countries, totaling 11.1%.
                                
3European Monetary Union consists of Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain. Euro-denominated bonds include corporate and European government debt.
  
4This market is not included in the Lehman Brothers Global Aggregate Index, the Citigroup World Government Bond Index or the JP Morgan GBI–EM Broad Diversified Index.
  
5Source: JP Morgan GBI–EM Broad Diversified Index.
                                
6Amount less than 0.1%.
                                


Summary investment portfolio March 31, 2008
unaudited

The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings.  For details on how to obtain a complete schedule of portfolio holdings, please see the inside back cover.
 
Principal
amount
(000)
Market
 value
(000)
Percent
 of net
 assets
Bonds & notes  - 91.36%
      
       
Euros  - 30.71%
      
German Government:
      
 5.25% 2011
€              88,485
US$     145,963
  
 5.00% 2012
61,340
101,955
  
 3.75% 2013
33,075
52,607
  
 4.50% 2013
28,575
46,890
  
 4.25% 2014
65,045
105,733
  
 3.50% 2016
33,400
51,531
  
 Series 6, 4.00% 2016
78,170
124,323
  
 3.75% 2017
62,500
97,516
  
 Series 7, 4.00% 2018
214,620
341,720
  
 6.25% 2024
95,635
182,653
  
 6.25% 2030
55,145
106,955
  
 1.50%-4.75% 2009-2034 (1) (2)
14,204
22,846
15.71%
Belgium (Kingdom of):
      
 Series 43, 4.25% 2014
59,565
95,741
  
 Series 49, 4.00% 2017
65,680
102,255
2.25
Netherlands Government Eurobond:
      
 5.50% 2010
25,000
41,074
  
 4.25% 2013
41,690
67,436
  
 4.00%-7.50% 2018-2037
21,100
38,244
1.67
Deutsche Genossenschaftsbank-Hypothekenbank AG: (3)
      
 4.50% 2013
25,500
41,024
  
 4.00% 2016
60,700
93,884
1.54
Schering-Plough Corp. 5.375% 2014
41,175
61,718
.70
Dexia Municipal Agency 4.50% 2017 (3)
29,550
46,779
.53
Bayerische Hypo- und Vereinsbank AG 6.00%-6.625% 2010-2014
9,410
15,278
  
UniCredito Italiano SpA 3.95%-5.75% 2016-2017 (4)
15,760
23,296
.44
Other securities
  
691,580
7.87
   
2,699,001
30.71
       
Japanese yen  - 7.19%
      
Japanese Government:
      
 0.90% 2008
¥          4,839,150
48,590
  
 1.80% 2010
5,700,000
58,510
  
 1.30% 2011
8,071,000
82,555
  
 1.50% 2014
22,659,500
236,696
  
 1.70% 2016
4,858,700
51,146
  
 1.20% 2017   (1) (2)
4,480,000
44,971
  
 0.50%-2.30% 2011-2035 (1) (2)
9,456,843
93,703
7.01
Other securities
  
15,704
.18
   
631,875
7.19
       
British pounds  - 4.09%
      
United Kingdom:
      
 4.00% 2016
£              27,150
53,154
  
 4.75% 2020
28,915
58,702
  
 6.00% 2028
19,865
46,864
  
 2.50%-8.00% 2009-2055 (1)
72,725
157,847
3.60
General Electric Capital Corp. 5.625% 2031
750
1,372
.02
Other securities
  
41,742
.47
   
359,681
4.09
       
Australian dollars  - 2.94%
      
Queensland Treasury Corp.:
      
 6.00% 2015
A$           80,204
70,472
  
 6.00% 2011-2017
32,060
28,147
1.12
European Investment Bank 6.125% 2017
80,955
70,462
.80
New South Wales Treasury Corp. 5.50% 2014
62,950
54,001
.62
Other securities
  
35,319
.40
   
258,401
2.94
       
Malaysian ringgit  - 2.85%
      
Malaysian Government:
      
 3.756% 2011
MYR      242,450
76,542
  
 3.833% 2011
142,000
44,980
  
 3.718% 2012
235,374
74,337
  
 3.814%-4.262% 2010-2017
172,330
54,313
2.85
   
250,172
2.85
       
Swedish kronor  - 2.76%
      
Swedish Government:
      
 5.25% 2011
SKr        279,150
48,930
  
 6.75% 2014
299,425
58,260
  
 1.049%-5.00% 2009-2020 (1) (3)
429,522
73,404
2.05
Other securities
  
62,299
.71
   
242,893
2.76
       
Israeli shekels  - 2.28%
      
Israeli Government: (2)
      
 7.50% 2014
ILS         267,083
84,176
  
 6.50% 2016
279,185
83,406
  
 5.00%-5.50% 2015-2017 (1)
112,240
32,365
2.28
   
199,947
2.28
       
Singapore dollars  - 2.16%
      
Singapore (Republic of):
      
 4.375% 2009
S$            56,495
42,082
  
 3.125% 2011
157,915
121,017
  
 3.75% 2016
32,520
26,299
2.16
   
189,398
2.16
       
Polish zloty  - 2.02%
      
Polish Government:
      
 5.00% 2013
PLN       210,945
90,158
  
 5.25%-6.00% 2008-2017
197,545
87,376
2.02
   
177,534
2.02
       
Mexican pesos  - 1.58%
      
United Mexican States Government:
      
 Series MI10, 9.50% 2014
MXN      438,663
45,840
  
 7.50%-10.00% 2012-2036
864,453
91,159
1.56
Other securities
  
1,400
.02
   
138,399
1.58
       
South Korean won  - 1.03%
      
South Korean Government 2.75%-5.00% 2008-2017 (1) (2)
KRW 91,560,116
90,187
1.03
   
90,187
1.03
       
Danish kroner  - 1.02%
      
Other securities
  
89,801
1.02
       
       
Turkish lire  - 0.97%
      
Turkey (Republic of): (2)
      
 10.00% 2012  (1)
TRY        57,781
42,700
  
 0%-16.00% 2008-2012
59,900
42,528
.97
   
85,228
.97
       
Norwegian kroner  - 0.64%
      
Norwegian Government 6.50% 2013
NKr       183,900
39,696
  
Other securities
  
16,873
.64
   
56,569
.64
       
U.S. dollars  - 25.95%
      
U.S. Treasury:
      
 5.75% 2010
US$                44,000
48,231
  
 4.875% 2012
59,050
65,199
  
 2.00%-8.875% 2008-2036 (1) (2)
218,907
240,638
4.03
Fannie Mae:
      
 5.25% 2012
39,500
41,270
  
 0%-10.22% 2017-2048 (3) (4)
195,945
197,660
2.72
Freddie Mac 0%-6.00% 2036-2038 (3) (4)
115,962
113,540
1.29
UniCredito Italiano SpA 5.584%-6.00% 2017 (4) (5)
12,605
12,561
  
HVB Funding Trust I 8.741% 2031 (2) (5)
4,250
3,759
.18
Turkey (Republic of) 6.75%-8.00% 2015-2034 (2)
13,525
13,974
.16
General Electric Co. 5.00%-5.25% 2013-2017
12,975
13,082
.15
United Mexican States Government Global 6.05%-6.375% 2013-2040
2,346
2,531
.03
Other securities
  
1,528,298
17.39
   
2,280,743
25.95
       
Other currencies - 3.17%
      
Other securities
  
278,792
3.17
       
       
       
Total bonds & notes (cost: $7,597,872,000)
  
8,028,621
91.36
       
       
       
       
 
Shares
Market
value
(000)
Percent
 of net
 assets
Warrants  - 0.00%
      
       
U.S. dollars - 0.00%
      
Other securities
  
-*
.00
       
       
       
Total warrants (cost: $52,000)
  
-*
.00
       
       
       
       
 
Shares
Market
value
 (000)
Percent
 of net
 assets
Preferred securities  - 2.20%
      
       
Euros  - 1.44%
      
HVB Funding Trust VIII 7.055% (4)
16,250,000
US$      25,116
  
UniCredito Italiano Capital Trust III 4.028% (4)
1,000,000
1,238
  
UniCredito Italiano Capital Trust I 8.048% (4)
8,000,000
13,008
.45
Other securities
  
86,781
.99
   
126,143
1.44
       
Other currencies - 0.64%
      
Other securities
  
56,451
.64
       
       
MISCELLANEOUS  -  0.12%
      
Other preferred securities in initial period of acquisition
  
10,546
.12
       
       
Total preferred securities (cost: $203,606,000)
  
193,140
2.20
       
       
       
       
 
Principal
 amount
 (000)
Market
value
(000)
Percent
 of net
assets
Short-term securities  - 4.40%
      
       
       
General Electric Capital Corp. 2.50% due 4/1/2008
US$                96,600
US$      96,593
1.10
UBS Finance (Delaware) LLC 4.12% due 5/12/2008
58,200
58,007
.66
Siemens Capital Co. LLC 2.15% due 5/14/2008 (5)
41,500
41,391
.47
Fannie Mae 2.66% due 4/23/2008
23,100
23,055
.26
Other securities
  
168,153
1.91
       
Total short-term securities (cost: $387,008,000)
  
387,199
4.40
       
       
Total investment securities (cost: $8,188,538,000)
  
8,608,960
97.96
Other assets less liabilities
  
179,104
2.04
       
Net assets
  
US$  8,788,064
100.00%
       
*Amount less than one thousand.
      
       
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
  
       
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio.
    
       
       
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
       
(1) Index-linked bond whose principal amount moves with a government retail price index.
    
(2) Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities, including those in "Other securities" was $805,786,000, which represented 9.17% of the net assets of the fund.
(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
(4) Coupon rate may change periodically.
      
(5) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities , including those in "Other securities," was $672,021,000, which represented 7.65% of the net assets of the fund.
       
See Notes to Financial Statements
      
 
 
Financial statements

Statement of assets and liabilities
        
unaudited
  
at March 31, 2008
  
(dollars and shares in thousands, except per-share amounts)
  
             
Assets:
            
  Investment securities at market (cost: $8,188,538)
         $ 8,608,960  
  Cash
           8,290  
  Receivables for:
              
    Sales of investments
   $ 41,332          
    Sales of fund's shares
     57,364          
    Open forward currency contracts
     53,540          
    Closed forward currency contracts
     17,125          
    Interest
     130,162       299,523  
              8,916,773  
Liabilities:
                
  Payables for:
                
    Purchases of investments
     84,206          
    Repurchases of fund's shares
     8,012          
    Open forward currency contracts
     26,342          
    Closed forward currency contracts
     3,263          
    Investment advisory services
     2,979          
    Services provided by affiliates
     3,096          
    Directors' deferred compensation
     94          
    Other
     717       128,709  
Net assets at March 31, 2008
           $ 8,788,064  
                 
Net assets consist of:
                
  Capital paid in on shares of capital stock
           $ 8,245,692  
  Distributions in excess of net investment income
             (10,811 )
  Undistributed net realized gain
             100,914  
  Net unrealized appreciation
             452,269  
Net assets at March 31, 2008
           $ 8,788,064  
                 
 
Total authorized capital stock - 1,000,000 shares, $.001 par value (428,004 total shares outstanding)
        
   
Net assets
    
Shares outstanding
    
Net asset value per share
  
                   
Class A
   $ 5,610,698       272,719     $ 20.57  
Class B
     254,680       12,458       20.44  
Class C
     674,802       33,175       20.34  
Class F
     1,537,892       75,108       20.48  
Class 529-A
     134,332       6,514       20.62  
Class 529-B
     14,835       723       20.51  
Class 529-C
     67,309       3,286       20.48  
Class 529-E
     7,780       379       20.53  
Class 529-F
     12,743       621       20.53  
Class R-1
     13,539       662       20.46  
Class R-2
     95,469       4,667       20.46  
Class R-3
     109,193       5,313       20.55  
Class R-4
     54,494       2,650       20.57  
Class R-5
     200,298       9,729       20.59  
(*) Maximum offering price and redemption price per share were equal to the net asset value per share for all share classes, except for Class A and 529-A, for which the maximum offering prices per share were $21.38 and $21.43, respectively.
  
                         
                         
See Notes to Financial Statements
                        
 
 
Statement of operations
            
for the six months ended March 31, 2008
            
Investment income:
        
unaudited
  
  Income:
  
(dollars in thousands)
  
    Interest (net of non-U.S. taxes of $841)
         $ 184,063  
               
  Fees and expenses(*):
              
    Investment advisory services
     16,344          
    Distribution services
     12,091          
    Transfer agent services
     2,765          
    Administrative services
     1,825          
    Reports to shareholders
     180          
    Registration statement and prospectus
     470          
    Postage, stationery and supplies
     329          
    Directors' compensation
     18          
    Auditing and legal
     16          
    Custodian
     905          
    State and local taxes
     79          
    Other
     47          
    Total fees and expenses before reimbursements/waivers
     35,069          
  Less reimbursements/waivers of fees and expenses:
                
    Investment advisory services
     1,634          
    Administrative services
     60          
    Total fees and expenses after reimbursements/waivers
             33,375  
  Net investment income
             150,688  
                 
Net realized gain and unrealized appreciation on
                
  investments and currency:
                
  Net realized gain on:
                
    Investments
     85,150          
    Currency transactions
     18,316       103,466  
  Net unrealized appreciation on:
                
    Investments
     188,921          
    Currency translations
     21,396       210,317  
      Net realized gain and unrealized appreciation
                
        on investments and currency
             313,783  
Net increase in net assets resulting
                
  from operations
           $ 464,471  
                 
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements.
  
                 
See Notes to Financial Statements
                
                 
                 
                 
                 
Statements of changes in net assets
  
(dollars in thousands)
  
                 
                 
   
Six months ended March 31, 2008*
    
Year ended September 30, 2007
  
                 
Operations:
                
  Net investment income
   $ 150,688     $ 184,590  
                 
  Net realized gain on investments and currency transactions
     103,466       76,930  
                 
  Net unrealized appreciation on investments and currency translations
     210,317       167,033  
                 
    Net increase in net assets resulting from operations
     464,471       428,553  
                 
Dividends and distributions paid to shareholders:
                
                 
  Dividends from net investment income and currency gain
     (280,141 )     (131,394 )
                 
  Distributions from net realized gain on investments
     (19,100 )     -  
                 
    Total dividends and distributions paid to shareholders
     (299,241 )     (131,394 )
                 
Net capital share transactions
     3,063,515       1,835,858  
                 
Total increase in net assets
     3,228,745       2,133,017  
                 
Net assets:
                
  Beginning of period
     5,559,319       3,426,302  
  End of period (including distributons in excess of and undistributed
                
    net investment income: ($10,811) and $118,642, respectively)
   $ 8,788,064     $ 5,559,319  
                 
*Unaudited.
                
                 
See Notes to Financial Statements
                
 
 


Notes to financial statements        
                                                                                                             unaudited
 
1. Organization and significant accounting policies
 
Organization – Capital World Bond Fund, Inc. (the "fund") is registered under the Investment Company Act of 1940 as an open-end, nondiversified management investment company. The fund seeks to maximize long-term total return, consistent with prudent management, by investing primarily in a global portfolio of investment-grade bonds denominated in U.S. dollars and other currencies. The fund may also invest in lower quality, high-yield debt securities.

The fund offers 14 share classes consisting of four retail share classes, five 529 college savings plan share classes and five retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F) can be utilized to save for college education. The five retirement plan share classes (R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry any conversion rights. The fund’s share classes are described below:

Share class
Initial sales charge
Contingent deferred sales charge upon redemption
Conversion feature
Class A and 529-A
Up to 3.75%
None (except 1% for certain redemptions within one year of purchase without an initial sales charge)
None
Class B and 529-B
None
Declines from 5% to 0% for redemptions within six years of purchase
Class B and 529-B convert to Class A and 529-A, respectively, after eight years
Class C
None
1% for redemptions within one year of purchase
Class C converts to Class F after 10 years
Class 529-C
None
1% for redemptions within one year of purchase
None
Class 529-E
None
None
None
Class F and 529-F
None
None
None
Class R-1, R-2, R-3, R-4 and R-5
None
None
None
 

Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.

Significant accounting policies – The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the fund:

Security valuation – Equity securities are valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from an independent pricing service when such prices are available. However, where the investment adviser deems it appropriate, such securities will be valued at the mean quoted bid and asked prices (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. The ability of the issuers of the debt securities held by the fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Forward currency contracts are valued at the mean of representative quoted bid and asked prices.

Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under procedures adopted by authority of the fund's board of directors. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.

Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.

Class allocations – Income, fees and expenses (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.

Dividends and distributions to shareholders – Dividends and distributions paid to shareholders are recorded on the ex-dividend date.

Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.

Forward currency contracts – The fund may enter into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund enters into these contracts to manage its exposure to changes in exchange rates arising from investments denominated in currencies other than U.S. dollars. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates. Due to these risks, the fund could incur losses up to the entire contract amount, which may exceed the net unrealized value shown on the accompanying financial statements. On a daily basis, the fund values forward currency contracts based on the applicable exchange rates and records unrealized gains or losses. The fund records realized gains or losses at the time the forward contract is closed or offset by another contract with the same broker for the same settlement date and currency.

Mortgage dollar rolls – The fund may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.

Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal. Risks may arise due to the delayed settlement date of the loan transaction and the ability of the agent and/or borrower to meet the obligations of the loan.
 
2. Investments outside the U.S.
 
Investment risk – The risks of investing in securities of issuers outside the U.S. may include, but are not limited to, investment and repatriation restrictions; revaluation of currencies; adverse political, social and economic developments; government involvement in the private sector; limited and less reliable investor information; lack of liquidity; certain local tax law considerations; and limited regulation of the securities markets.

Taxation – Interest income is recorded net of non-U.S. taxes paid. Realized and unrealized gains on securities in certain countries are subject to non-U.S. taxes. The fund records a liability based on realized and unrealized gains to provide for potential non-U.S. taxes payable on these securities. For the six months ended March 31, 2008, non-U.S. taxes paid on realized gains were $12,000. In addition, as of March 31, 2008, the liability for non-U.S. taxes based on realized and unrealized gains was $212,000.

3. Federal income taxation and distributions

The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.

As of and during the period ended March 31, 2008, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.

The fund is not subject to examination by U.S. federal tax authorities for tax years before 2003, by state tax authorities for tax years before 2002, and by tax authorities outside the U.S. for tax years before 2004.

Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; cost of investments sold; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.

The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of September 30, 2007, the fund had tax basis undistributed ordinary income of $127,346,000 and undistributed long-term capital gain of $18,990,000.

As of March 31, 2008, the tax basis unrealized appreciation (depreciation) and cost of  investment securities were as follows:

  (dollars in thousands)  
Gross unrealized appreciation on investment securities
   $ 562,275  
Gross unrealized depreciation on investment securities
  
<148,298>
  
Net unrealized appreciation on investment securities
     413,977  
Cost of investment securities
     8,194,983  

The tax character of distributions paid to shareholders was as follows (dollars in thousands):
 
   
Six months ended March 31, 2008
    
Year ended September 30, 2007
  
   
Ordinary income
    
Long-term capital gains
    
Total distributions paid
    
Ordinary income
    
Long-term capital gains
    
Total distributions paid
  
Share class
                                    
Class A
   $ 180,941     $ 12,161     $ 193,102     $ 87,625       -     $ 87,625  
Class B
     6,877       513       7,390       3,399       -       3,399  
Class C
     18,347       1,387       19,734       7,755       -       7,755  
Class F
     51,247       3,447       54,694       22,752       -       22,752  
Class 529-A
     4,515       306       4,821       2,263       -       2,263  
Class 529-B
     439       35       474       221       -       221  
Class 529-C
     1,939       152       2,091       836       -       836  
Class 529-E
     241       17       258       117       -       117  
Class 529-F
     453       30       483       201       -       201  
Class R-1
     395       31       426       125       -       125  
Class R-2
     2,810       216       3,026       1,287       -       1,287  
Class R-3
     3,391       241       3,632       1,478       -       1,478  
Class R-4
     1,725       116       1,841       713       -       713  
Class R-5
     6,821       448       7,269       2,622       -       2,622  
Total
   $ 280,141     $ 19,100     $ 299,241     $ 131,394       -     $ 131,394  
 
4. Fees and transactions with related parties

Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Service Company SM ("AFS"), the fund’s transfer agent, and American Funds Distributors, SM Inc. ("AFD"), the principal underwriter of the fund’s shares.

Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a declining series of annual rates beginning with 0.570% on the first $1 billion of daily net assets and decreasing to 0.450% on such assets in excess of $3 billion. The board of directors approved an amended agreement effective November 1, 2007, decreasing the annual rate on net assets in excess of $6 billion, from a rate of 0.45% to a rate of 0.41%. CRMC is currently waiving 10% of investment advisory services fees. During the six months ended March 31, 2008, total investment advisory services fees waived by CRMC were $1,634,000. As a result, the fee shown on the accompanying financial statements of $16,344,000, which was equivalent to an annualized rate of 0.477%, was reduced to $14,710,000, or 0.429% of average daily net assets.

Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:

Distribution services – The fund has adopted plans of distribution for all share classes, except Class R-5. Under the plans, the board of directors approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of directors has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.

For Class A and 529-A, the board of directors has also approved the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These classes reimburse AFD for amounts billed within the prior 15 months, but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of March 31, 2008, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A.

Share class
Currently approved limits
Plan limits
Class A
0.30%
0.30%
Class 529-A
0.30
0.50
Class B and 529-B
1.00
1.00
Class C, 529-C and R-1
1.00
1.00
Class R-2
0.75
1.00
Class 529-E and R-3
0.50
0.75
Class F, 529-F and R-4
0.25
0.50

Transfer agent services – The fund has a transfer agent agreement with AFS for Class A and B. Under this agreement, these share classes compensate AFS for transfer agent services including shareholder recordkeeping, communications and transaction processing. AFS is also compensated for certain transfer agent services provided to all other share classes from the administrative services fees paid to CRMC described below.

Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Class A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5) based on its respective average daily net assets. Each relevant share class also pays AFS additional amounts for certain transfer agent services. CRMC and AFS may use these fees to compensate third parties for performing these services. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the six months ended March 31, 2008, the total administrative services fees paid by CRMC were $60,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional annual administrative services fee of 0.10% of its respective average daily net assets; this fee is payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party. 

Expenses under the agreements described above for the six months ended March 31, 2008, were as follows (dollars in thousands):

Share class
Distribution services
Transfer agent services
Administrative services
CRMC administrative services
Transfer agent services
Commonwealth of Virginia administrative services
Class A
$6,037
$2,638
Not applicable
Not applicable
Not applicable
Class B
 944
 127
Not applicable
Not applicable
Not applicable
Class C
 2,513
 
 
 
 
 
 
Included
in
administrative services
$376
$54
Not applicable
Class F
 1,527
 644
 95
Not applicable
Class 529-A
 110
 58
 9
$55
Class 529-B
 62
 7
 2
 6
Class 529-C
 271
 29
 8
 27
Class 529-E
 15
 3
 1
 3
Class 529-F
 -
 5
 1
 6
Class R-1
 54
 5
 5
Not applicable
Class R-2
 288
 54
 163
Not applicable
Class R-3
 217
 61
 40
Not applicable
Class R-4
 53
 29
 4
Not applicable
Class R-5
Not applicable
 72
 3
Not applicable
Total
$12,091
$2,765
$1,343
$385
$97

Directors’ deferred compensation – Since the adoption of the deferred compensation plan in 1993, directors who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Directors’ compensation of $18,000, shown on the accompanying financial statements, includes $21,000 in current fees (either paid in cash or deferred) and a net decrease of $3,000 in the value of the deferred amounts.

Affiliated officers and directors – Officers and certain directors of the fund are or may be considered to be affiliated with CRMC, AFS and AFD. No affiliated officers or directors received any compensation directly from the fund.

5. Capital share transactions

Capital share transactions in the fund were as follows (dollars and shares in thousands):
 
Share class
  
Sales(*)
    
Reinvestments of dividends and distributions
    
Repurchases(*)
    
Net increase
  
   
Amount
    
Shares
    
Amount
    
Shares
    
Amount
    
Shares
    
Amount
    
Shares
  
Six months ended March 31, 2008
                                      
Class A
   $ 2,077,019       102,508     $ 177,330       8,964     $ (318,328 )     (15,738 )   $ 1,936,021       95,734  
Class B
     105,321       5,223       6,583       336       (17,765 )     (880 )     94,139       4,679  
Class C
     288,371       14,387       17,971       919       (44,460 )     (2,223 )     261,882       13,083  
Class F
     602,623       29,888       44,982       2,286       (115,455 )     (5,738 )     532,150       26,436  
Class 529-A
     40,222       1,985       4,821       243       (6,777 )     (333 )     38,266       1,895  
Class 529-B
     3,601       179       473       24       (282 )     (15 )     3,792       188  
Class 529-C
     21,267       1,056       2,090       106       (2,743 )     (136 )     20,614       1,026  
Class 529-E
     2,478       122       258       13       (231 )     (11 )     2,505       124  
Class 529-F
     3,801       188       483       24       (411 )     (20 )     3,873       192  
Class R-1
     6,337       314       426       22       (1,863 )     (93 )     4,900       243  
Class R-2
     35,186       1,747       3,026       154       (9,687 )     (482 )     28,525       1,419  
Class R-3
     46,899       2,318       3,628       184       (16,721 )     (827 )     33,806       1,675  
Class R-4
     23,963       1,186       1,841       93       (4,483 )     (222 )     21,321       1,057  
Class R-5
     91,428       4,516       7,079       358       (16,786 )     (829 )     81,721       4,045  
Total net increase
                                                                
   (decrease)
   $ 3,348,516       165,617     $ 270,991       13,726     $ (555,992 )     (27,547 )   $ 3,063,515       151,796  
                                                                 
Year ended September 30, 2007
                                                          
Class A
   $ 1,462,206       75,433     $ 79,126       4,109     $ (409,704 )     (21,198 )   $ 1,131,628       58,344  
Class B
     45,510       2,360       3,010       157       (20,878 )     (1,086 )     27,642       1,431  
Class C
     192,086       10,019       7,025       368       (62,520 )     (3,268 )     136,591       7,119  
Class F
     506,243       26,233       18,677       974       (153,594 )     (7,963 )     371,326       19,244  
Class 529-A
     35,627       1,836       2,263       117       (7,039 )     (363 )     30,851       1,590  
Class 529-B
     2,976       154       221       12       (808 )     (42 )     2,389       124  
Class 529-C
     19,226       997       836       44       (3,823 )     (198 )     16,239       843  
Class 529-E
     1,831       95       117       6       (431 )     (22 )     1,517       79  
Class 529-F
     4,010       208       201       10       (600 )     (30 )     3,611       188  
Class R-1
     5,408       281       125       7       (1,040 )     (55 )     4,493       233  
Class R-2
     32,485       1,686       1,285       67       (12,991 )     (675 )     20,779       1,078  
Class R-3
     41,519       2,141       1,476       77       (14,123 )     (730 )     28,872       1,488  
Class R-4
     17,082       881       713       37       (4,526 )     (233 )     13,269       685  
Class R-5
     57,822       2,980       2,505       130       (13,676 )     (708 )     46,651       2,402  
Total net increase
                                                                
   (decrease)
   $ 2,424,031       125,304     $ 117,580       6,115     $ (705,753 )     (36,571 )   $ 1,835,858       94,848  
                                                                 
(*) Includes exchanges between share classes of the fund.
                                  

6. Forward currency contracts

As of March 31, 2008, the fund had open forward currency contracts to purchase or sell currencies as follows (amounts in thousands):
 
   
Contract amount
    
U.S. valuation at March 31, 2008
  
                         
   
Receive
    
Deliver
    
Amount
    
 Unrealized (depreciation) appreciation
  
                         
Purchases:
                        
                         
 Canadian dollars
                        
expiring 4/17 to 5/13/2008
   $ C24,304    
US$24,137
    
US$23,638
    
US$(499)
  
                           
 Euros
                          
expiring 4/4 to 6/27/2008
   € 268,242       403,445       422,648       19,203  
                                 
 Japanese yen
                                
expiring 4/4 to 6/17/2008
   ¥ 60,597,516       578,762       608,732       29,970  
                                 
 Norwegian kroner
                                
expiring 5/13/2008
  
NKr109,672
       21,286       21,471       185  
                                 
 Singapore dollars
                                
expiring 6/17 to 9/10/2008
   $ S74,189       54,000       54,075       75  
                                 
 Swiss francs
                                
expiring 6/4 to 6/17/2008
  
CHF61,615
       59,661       62,047       2,386  
                                 
                              51,320  
Sales:
                                
                                 
 Australian dollars
                                
expiring 4/9 to 6/17/2008
   $ 152,484     $ A168,625       152,921       (437 )
                                 
 Brazilian reais
                                
expiring 5/20/2008
     2,868    
BRL5,100
       2,881       (13 )
                                 
 British pounds
                                
expiring 4/4 to 6/20/2008
     190,215     £ 96,393       190,779       (564 )
                                 
 Euros
                                
expiring 4/14 to 6/27/2008
     535,663     € 354,878       559,026       (23,363 )
                                 
 Israeli shekels
                                
expiring 4/11 to 6/20/2008
     77,760    
ILS270,798
       76,652       1,108  
                                 
 Japanese yen
                                
expiring 5/21/2008
     3,640     ¥ 390,000       3,921       (281 )
                                 
 Mexican pesos
                                
expiring 5/21/2008
     27,904    
MXN304,500
       28,392       (488 )
                                 
 Norwegian kroner
                                
expiring 6/4 to 6/17/2008
     29,754    
NKr155,500
       30,360       (606 )
                                 
 Swedish kronor
                                
expiring 6/4 to 6/17/2008
     29,907    
SKr185,000
       31,022       (1,115 )
                                 
 South African rand
                                
expiring 5/19/2008
     4,129    
ZAR32,350
       3,940       189  
                                 
 South Korean won
                                
expiring 5/19 to 6/10/2008
     34,567    
KRW32,989,705
       33,341       1,226  
                                 
 Turkish lire
                                
expiring 5/1 to 6/2/2008
     19,840    
TRY26,625
       19,614       226  
                                 
 Uruguayan pesos
                                
expiring 5/19 to 6/10/2008
     2,067    
UYU43,025
       2,071       (4 )
                                 
                              (24,122 )
                                 
Forward currency contracts - net
                          
US$27,198
  

7. Investment transactions

The fund made purchases and sales of investment securities, excluding short-term securities, of $5,269,226,000 and $2,588,896,000, respectively, during the six months ended March 31, 2008.
 

 
Financial highlights (1)

      Income from investment operations(2)   Dividends and distributions                    
   
Net asset value, beginning of period
Net investment income
Net gains (losses)
on securities
 (both realized and unrealized)
Total from investment operations
Dividends (from net investment income)
Distributions (from capital gains)
Total dividends and distributions
Net asset value, end of period
Total return (3) (4)
Net assets, end of period (in millions)
Ratio of expenses to average net assets before reimbursements/
waivers
Ratio of expenses to average net assets after reimbursements/
waivers (4)
Ratio of net income to average net assets (4)
Class A:
                                          
  Six months ended 3/31/2008
(5)
$20.17
$.45
   $
.88
  
$1.33
$(.87)
$(.06)
$(.93)
$20.57
6.87%
$5,611
  
.93%
(6)
.89%
(6)
4.48%
(6)
  Year ended 9/30/2007
  
 18.93
.84
    
1.04
  
1.88
(.64)
-
(.64)
20.17
10.14
3,569
  
.98
  
.93
  
4.32
  
  Year ended 9/30/2006
  
 19.34
.78
    
(.23)
  
.55
(.74)
(.22)
(.96)
18.93
3.05
2,246
  
.96
  
.91
  
4.19
  
  Year ended 9/30/2005
  
 19.02
.74
    
.50
  
1.24
(.82)
(.10)
(.92)
19.34
6.54
1,907
  
.98
  
.93
  
3.76
  
  Year ended 9/30/2004
  
 18.37
.69
    
.74
  
1.43
(.78)
-
(.78)
19.02
7.96
1,166
  
1.03
  
1.02
  
3.74
  
  Year ended 9/30/2003
  
 15.60
.72
    
2.55
  
3.27
(.50)
-
(.50)
18.37
21.34
827
  
1.09
  
1.04
  
4.22
  
Class B:
                                          
  Six months ended 3/31/2008
(5)
 20.02
.38
    
.86
  
1.24
(.76)
(.06)
(.82)
20.44
6.47
255
  
1.67
(6)
1.63
(6)
3.74
(6)
  Year ended 9/30/2007
  
 18.79
.69
    
1.04
  
1.73
(.50)
-
(.50)
20.02
9.38
156
  
1.71
  
1.66
  
3.59
  
  Year ended 9/30/2006
  
 19.21
.63
    
(.23)
  
.40
(.60)
(.22)
(.82)
18.79
2.22
119
  
1.74
  
1.68
  
3.41
  
  Year ended 9/30/2005
  
 18.90
.58
    
.51
  
1.09
(.68)
(.10)
(.78)
19.21
5.75
111
  
1.74
  
1.70
  
2.99
  
  Year ended 9/30/2004
  
 18.27
.55
    
.73
  
1.28
(.65)
-
(.65)
18.90
7.12
78
  
1.77
  
1.77
  
3.00
  
  Year ended 9/30/2003
  
 15.52
.58
    
2.55
  
3.13
(.38)
-
(.38)
18.27
20.41
56
  
1.86
  
1.81
  
3.40
  
Class C:
                                          
  Six months ended 3/31/2008
(5)
 19.92
.37
    
.87
  
1.24
(.76)
(.06)
(.82)
20.34
6.49
675
  
1.71
(6)
1.66
(6)
3.70
(6)
  Year ended 9/30/2007
  
 18.71
.68
    
1.03
  
1.71
(.50)
-
(.50)
19.92
9.31
400
  
1.74
  
1.69
  
3.56
  
  Year ended 9/30/2006
  
 19.13
.62
    
(.23)
  
.39
(.59)
(.22)
(.81)
18.71
2.21
243
  
1.78
  
1.72
  
3.38
  
  Year ended 9/30/2005
  
 18.84
.57
    
.50
  
1.07
(.68)
(.10)
(.78)
19.13
5.66
204
  
1.78
  
1.74
  
2.96
  
  Year ended 9/30/2004
  
 18.22
.54
    
.73
  
1.27
(.65)
-
(.65)
18.84
7.11
110
  
1.82
  
1.82
  
2.95
  
  Year ended 9/30/2003
  
 15.48
.57
    
2.54
  
3.11
(.37)
-
(.37)
18.22
20.33
47
  
1.92
  
1.87
  
3.32
  
Class F:
                                          
  Six months ended 3/31/2008
(5)
 20.08
.45
    
.88
  
1.33
(.87)
(.06)
(.93)
20.48
6.89
1,538
  
.90
(6)
.85
(6)
4.52
(6)
  Year ended 9/30/2007
  
 18.85
.85
    
1.03
  
1.88
(.65)
-
(.65)
20.08
10.18
977
  
.92
  
.87
  
4.38
  
  Year ended 9/30/2006
  
 19.26
.78
    
(.23)
  
.55
(.74)
(.22)
(.96)
18.85
3.07
555
  
.95
  
.89
  
4.22
  
  Year ended 9/30/2005
  
 18.95
.73
    
.50
  
1.23
(.82)
(.10)
(.92)
19.26
6.51
388
  
.99
  
.95
  
3.75
  
  Year ended 9/30/2004
  
 18.31
.69
    
.73
  
1.42
(.78)
-
(.78)
18.95
7.94
186
  
1.05
  
1.04
  
3.73
  
  Year ended 9/30/2003
  
 15.55
.71
    
2.54
  
3.25
(.49)
-
(.49)
18.31
21.27
59
  
1.16
  
1.11
  
4.09
  
Class 529-A:
                                          
  Six months ended 3/31/2008
(5)
 20.21
.45
    
.88
  
1.33
(.86)
(.06)
(.92)
20.62
6.89
134
  
.96
(6)
.91
(6)
4.46
(6)
  Year ended 9/30/2007
  
 18.97
.83
    
1.04
  
1.87
(.63)
-
(.63)
20.21
10.09
93
  
1.00
  
.95
  
4.30
  
  Year ended 9/30/2006
  
 19.38
.78
    
(.23)
  
.55
(.74)
(.22)
(.96)
18.97
3.02
57
  
.99
  
.94
  
4.18
  
  Year ended 9/30/2005
  
 19.07
.73
    
.50
  
1.23
(.82)
(.10)
(.92)
19.38
6.51
39
  
1.02
  
.97
  
3.72
  
  Year ended 9/30/2004
  
 18.41
.69
    
.74
  
1.43
(.77)
-
(.77)
19.07
7.89
21
  
1.07
  
1.06
  
3.71
  
  Year ended 9/30/2003
  
 15.63
.72
    
2.56
  
3.28
(.50)
-
(.50)
18.41
21.35
9
  
1.07
  
1.02
  
4.16
  
Class 529-B:
                                          
  Six months ended 3/31/2008
(5)
 20.07
.37
    
.87
  
1.24
(.74)
(.06)
(.80)
20.51
6.39
15
  
1.78
(6)
1.74
(6)
3.64
(6)
  Year ended 9/30/2007
  
 18.84
.67
    
1.04
  
1.71
(.48)
-
(.48)
20.07
9.25
11
  
1.82
  
1.77
  
3.47
  
  Year ended 9/30/2006
  
 19.26
.61
    
(.23)
  
.38
(.58)
(.22)
(.80)
18.84
2.10
8
  
1.86
  
1.81
  
3.29
  
  Year ended 9/30/2005
  
 18.95
.55
    
.51
  
1.06
(.65)
(.10)
(.75)
19.26
5.55
7
  
1.90
  
1.86
  
2.83
  
  Year ended 9/30/2004
  
 18.32
.52
    
.73
  
1.25
(.62)
-
(.62)
18.95
6.95
4
  
1.96
  
1.95
  
2.81
  
  Year ended 9/30/2003
  
 15.56
.55
    
2.56
  
3.11
(.35)
-
(.35)
18.32
20.22
2
  
2.04
  
1.99
  
3.19
  
Class 529-C:
                                          
  Six months ended 3/31/2008
(5)
 20.05
.37
    
.87
  
1.24
(.75)
(.06)
(.81)
20.48
6.43
67
  
1.77
(6)
1.72
(6)
3.65
(6)
  Year ended 9/30/2007
  
 18.83
.67
    
1.04
  
1.71
(.49)
-
(.49)
20.05
9.23
45
  
1.81
  
1.76
  
3.49
  
  Year ended 9/30/2006
  
 19.25
.62
    
(.24)
  
.38
(.58)
(.22)
(.80)
18.83
2.14
27
  
1.84
  
1.79
  
3.32
  
  Year ended 9/30/2005
  
 18.94
.56
    
.51
  
1.07
(.66)
(.10)
(.76)
19.25
5.60
19
  
1.88
  
1.84
  
2.85
  
  Year ended 9/30/2004
  
 18.32
.52
    
.73
  
1.25
(.63)
-
(.63)
18.94
6.94
11
  
1.94
  
1.93
  
2.84
  
  Year ended 9/30/2003
  
 15.56
.56
    
2.55
  
3.11
(.35)
-
(.35)
18.32
20.24
5
  
2.02
  
1.97
  
3.22
  
Class 529-E:
                                          
  Six months ended 3/31/2008
(5)
 20.11
.42
    
.88
  
1.30
(.82)
(.06)
(.88)
20.53
6.70
8
  
1.26
(6)
1.21
(6)
4.16
(6)
  Year ended 9/30/2007
  
 18.88
.77
    
1.04
  
1.81
(.58)
-
(.58)
20.11
9.77
5
  
1.30
  
1.25
  
4.00
  
  Year ended 9/30/2006
  
 19.30
.72
    
(.24)
  
.48
(.68)
(.22)
(.90)
18.88
2.64
3
  
1.32
  
1.27
  
3.84
  
  Year ended 9/30/2005
  
 18.99
.66
    
.51
  
1.17
(.76)
(.10)
(.86)
19.30
6.13
2
  
1.36
  
1.31
  
3.39
  
  Year ended 9/30/2004
  
 18.35
.62
    
.73
  
1.35
(.71)
-
(.71)
18.99
7.53
1
  
1.41
  
1.40
  
3.36
  
  Year ended 9/30/2003
  
 15.59
.65
    
2.55
  
3.20
(.44)
-
(.44)
18.35
20.84
1
  
1.48
  
1.43
  
3.71
  
                                           
Class 529-F:
                                          
  Six months ended 3/31/2008
(5)
$20.14
$.47
   $
.87
  
$1.34
$(.89)
$(.06)
$(.95)
$20.53
6.97%
$13
  
.76%
(6)
.71%
(6)
4.66%
(6)
  Year ended 9/30/2007
  
 18.90
.87
    
1.04
  
1.91
(.67)
-
(.67)
20.14
10.33
9
  
.80
  
.75
  
4.51
  
  Year ended 9/30/2006
  
 19.31
.81
    
(.23)
  
.58
(.77)
(.22)
(.99)
18.90
3.19
4
  
.82
  
.77
  
4.35
  
  Year ended 9/30/2005
  
 18.98
.73
    
.51
  
1.24
(.81)
(.10)
(.91)
19.31
6.52
3
  
.99
  
.95
  
3.75
  
  Year ended 9/30/2004
  
 18.36
.67
    
.72
  
1.39
(.77)
-
(.77)
18.98
7.72
2
  
1.16
  
1.15
  
3.62
  
  Year ended 9/30/2003
  
 15.60
.69
    
2.56
  
3.25
(.49)
-
(.49)
18.36
21.19
-
(7)
1.23
  
1.18
  
3.94
  
Class R-1:
                                          
  Six months ended 3/31/2008
(5)
 20.03
.37
    
.88
  
1.25
(.76)
(.06)
(.82)
20.46
6.45
14
  
1.72
(6)
1.67
(6)
3.70
(6)
  Year ended 9/30/2007
  
 18.82
.68
    
1.04
  
1.72
(.51)
-
(.51)
20.03
9.30
9
  
1.78
  
1.71
  
3.56
  
  Year ended 9/30/2006
  
 19.24
.63
    
(.23)
  
.40
(.60)
(.22)
(.82)
18.82
2.22
3
  
1.83
  
1.71
  
3.40
  
  Year ended 9/30/2005
  
 18.96
.58
    
.49
  
1.07
(.69)
(.10)
(.79)
19.24
5.60
2
  
1.85
  
1.73
  
2.97
  
  Year ended 9/30/2004
  
 18.32
.55
    
.74
  
1.29
(.65)
-
(.65)
18.96
7.14
1
  
1.95
  
1.82
  
2.94
  
  Year ended 9/30/2003
  
 15.57
.58
    
2.54
  
3.12
(.37)
-
(.37)
18.32
20.33
1
  
2.15
  
1.86
  
3.32
  
Class R-2:
                                          
  Six months ended 3/31/2008
(5)
 20.03
.38
    
.87
  
1.25
(.76)
(.06)
(.82)
20.46
6.45
95
  
1.85
(6)
1.64
(6)
3.73
(6)
  Year ended 9/30/2007
  
 18.81
.69
    
1.04
  
1.73
(.51)
-
(.51)
20.03
9.34
65
  
1.96
  
1.67
  
3.58
  
  Year ended 9/30/2006
  
 19.23
.64
    
(.23)
  
.41
(.61)
(.22)
(.83)
18.81
2.26
41
  
2.18
  
1.70
  
3.42
  
  Year ended 9/30/2005
  
 18.94
.58
    
.50
  
1.08
(.69)
(.10)
(.79)
19.23
5.68
26
  
2.23
  
1.71
  
2.99
  
  Year ended 9/30/2004
  
 18.32
.55
    
.74
  
1.29
(.67)
-
(.67)
18.94
7.18
11
  
2.51
  
1.78
  
2.99
  
  Year ended 9/30/2003
  
 15.57
.58
    
2.55
  
3.13
(.38)
-
(.38)
18.32
20.38
3
  
2.91
  
1.81
  
3.29
  
Class R-3:
                                          
  Six months ended 3/31/2008
(5)
 20.13
.42
    
.88
  
1.30
(.82)
(.06)
(.88)
20.55
6.74
109
  
1.26
(6)
1.22
(6)
4.16
(6)
  Year ended 9/30/2007
  
 18.90
.77
    
1.04
  
1.81
(.58)
-
(.58)
20.13
9.74
73
  
1.31
  
1.26
  
4.00
  
  Year ended 9/30/2006
  
 19.32
.71
    
(.23)
  
.48
(.68)
(.22)
(.90)
18.90
2.68
41
  
1.32
  
1.27
  
3.82
  
  Year ended 9/30/2005
  
 18.99
.66
    
.50
  
1.16
(.73)
(.10)
(.83)
19.32
6.07
43
  
1.36
  
1.32
  
3.37
  
  Year ended 9/30/2004
  
 18.32
.63
    
.75
  
1.38
(.71)
-
(.71)
18.99
7.59
8
  
1.42
  
1.40
  
3.38
  
  Year ended 9/30/2003
  
 15.59
.64
    
2.53
  
3.17
(.44)
-
(.44)
18.32
20.81
2
  
1.73
  
1.43
  
3.68
  
Class R-4:
                                          
  Six months ended 3/31/2008
(5)
 20.16
.45
    
.89
  
1.34
(.87)
(.06)
(.93)
20.57
6.87
54
  
.94
(6)
.89
(6)
4.49
(6)
  Year ended 9/30/2007
  
 18.92
.84
    
1.04
  
1.88
(.64)
-
(.64)
20.16
10.08
32
  
.98
  
.93
  
4.34
  
  Year ended 9/30/2006
  
 19.34
.78
    
(.24)
  
.54
(.74)
(.22)
(.96)
18.92
3.04
17
  
.99
  
.94
  
4.17
  
  Year ended 9/30/2005
  
 19.03
.74
    
.50
  
1.24
(.83)
(.10)
(.93)
19.34
6.51
11
  
.98
  
.94
  
3.77
  
  Year ended 9/30/2004
  
 18.40
.69
    
.73
  
1.42
(.79)
-
(.79)
19.03
7.91
4
  
1.11
  
1.05
  
3.72
  
  Year ended 9/30/2003
  
 15.63
.70
    
2.57
  
3.27
(.50)
-
(.50)
18.40
21.34
-
(7)
2.70
  
1.08
  
3.94
  
Class R-5:
                                          
  Six months ended 3/31/2008
(5)
 20.19
.49
    
.88
  
1.37
(.91)
(.06)
(.97)
20.59
7.05
200
  
.63
(6)
.58
(6)
4.80
(6)
  Year ended 9/30/2007
  
 18.95
.90
    
1.03
  
1.93
(.69)
-
(.69)
20.19
10.43
115
  
.67
  
.62
  
4.65
  
  Year ended 9/30/2006
  
 19.35
.83
    
(.22)
  
.61
(.79)
(.22)
(1.01)
18.95
3.36
62
  
.69
  
.64
  
4.46
  
  Year ended 9/30/2005
  
 19.04
.79
    
.50
  
1.29
(.88)
(.10)
(.98)
19.35
6.78
63
  
.69
  
.65
  
4.04
  
  Year ended 9/30/2004
  
 18.38
.75
    
.74
  
1.49
(.83)
-
(.83)
19.04
8.32
32
  
.73
  
.72
  
4.04
  
  Year ended 9/30/2003
  
 15.62
.77
    
2.54
  
3.31
(.55)
-
(.55)
18.38
21.60
25
  
.81
  
.76
  
4.49
  


   
Six months ended
                                
   
March 31,
    
Year ended September 30
  
   
2008(5)
    
2007
    
2006
    
2005
    
2004
    
2003
  
                                     
Portfolio turnover rate for all classes of shares
     40 %     76 %     91 %     72 %     79 %     83 %


(1) Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
(2) Based on average shares outstanding.
(3) Total returns exclude any applicable sales charges, including contingent deferred sales charges.
(4) This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes.
(5) Unaudited.
(6) Annualized.
(7) Amount less than $1 million.
 
See Notes to Financial Statements
 

 
Expense example
unaudited
 
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2007, through March 31, 2008).
 
Actual expenses:
 
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
 
Hypothetical example for comparison purposes:
 
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
 
Notes:
 
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts  (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually) that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F and 529-F shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would also be lower by the amount of these fees.
 
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

   
Beginning account value 10/1/2007
    
Ending account value 3/31/2008
    
Expenses paid during period*
    
Annualized expense ratio
  
                         
Class A -- actual return
   $ 1,000.00     $ 1,068.74     $ 4.60       .89 %
Class A -- assumed 5% return
     1,000.00       1,020.55       4.50       .89  
Class B -- actual return
     1,000.00       1,064.75       8.41       1.63  
Class B -- assumed 5% return
     1,000.00       1,016.85       8.22       1.63  
Class C -- actual return
     1,000.00       1,064.92       8.57       1.66  
Class C -- assumed 5% return
     1,000.00       1,016.70       8.37       1.66  
Class F -- actual return
     1,000.00       1,068.89       4.40       .85  
Class F -- assumed 5% return
     1,000.00       1,020.75       4.29       .85  
Class 529-A -- actual return
     1,000.00       1,068.92       4.71       .91  
Class 529-A -- assumed 5% return
     1,000.00       1,020.45       4.60       .91  
Class 529-B -- actual return
     1,000.00       1,063.92       8.98       1.74  
Class 529-B -- assumed 5% return
     1,000.00       1,016.30       8.77       1.74  
Class 529-C -- actual return
     1,000.00       1,064.27       8.88       1.72  
Class 529-C -- assumed 5% return
     1,000.00       1,016.40       8.67       1.72  
Class 529-E -- actual return
     1,000.00       1,066.96       6.25       1.21  
Class 529-E -- assumed 5% return
     1,000.00       1,018.95       6.11       1.21  
Class 529-F -- actual return
     1,000.00       1,069.70       3.67       .71  
Class 529-F -- assumed 5% return
     1,000.00       1,021.45       3.59       .71  
Class R-1 -- actual return
     1,000.00       1,064.51       8.62       1.67  
Class R-1 -- assumed 5% return
     1,000.00       1,016.65       8.42       1.67  
Class R-2 -- actual return
     1,000.00       1,064.47       8.46       1.64  
Class R-2 -- assumed 5% return
     1,000.00       1,016.80       8.27       1.64  
Class R-3 -- actual return
     1,000.00       1,067.39       6.31       1.22  
Class R-3 -- assumed 5% return
     1,000.00       1,018.90       6.16       1.22  
Class R-4 -- actual return
     1,000.00       1,068.73       4.60       .89  
Class R-4 -- assumed 5% return
     1,000.00       1,020.55       4.50       .89  
Class R-5 -- actual return
     1,000.00       1,070.49       3.00       .58  
Class R-5 -- assumed 5% return
     1,000.00       1,022.10       2.93       .58  
 
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period (183), and divided by 366 (to reflect the one-half year period).
 


[logo - American Funds®]

The right choice for the long term®

Offices of the fund and of the
investment adviser
Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071-1406

6455 Irvine Center Drive
Irvine, CA 92618

Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070

Transfer agent for
shareholder accounts
American Funds Service Company
(Please write to the address
nearest you.)

P.O. Box 25065
Santa Ana, CA 92799-5065

P.O. Box 659522
San Antonio, TX 78265-9522

P.O. Box 6007
Indianapolis, IN 46206-6007

P.O. Box 2280
Norfolk, VA 23501-2280

Counsel
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228

Independent registered public
accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188

Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406

Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.

“American Funds Proxy Voting Guidelines” — which describes how we vote proxies relating to portfolio securities — is available free of charge on the U.S. Securities and Exchange Commission (SEC) website at sec.gov, on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by August 31. The report also is available on the SEC and American Funds websites.

A complete March 31, 2008, portfolio of Capital World Bond Fund’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).

Capital World Bond Fund files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. (800/SEC-0330). Additionally, the list of portfolio holdings also is available by calling AFS.

This report is for the information of shareholders of Capital World Bond Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after June 30, 2008, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.


The Capital Group Companies
 
American Funds    Capital Research and Management    Capital International    Capital Guardian    Capital Bank and Trust
 

 
Lit. No. MFGESR-931-0508P
 
Litho in USA WG/CG/8098-S10076
 
10% post-consumer waste
 
Printed with inks containing soy and/or vegetable oil
 
 
ITEM 2 – Code of Ethics

Not applicable for filing of semi-annual reports to shareholders.


ITEM 3 – Audit Committee Financial Expert

Not applicable for filing of semi-annual reports to shareholders.


ITEM 4 – Principal Accountant Fees and Services

Not applicable for filing of semi-annual reports to shareholders.


ITEM 5 – Audit Committee of Listed Registrants

Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
 
 
ITEM 6 – Schedule of Investments
 
[logo – American Funds®]
 

Capital World Bond Fund®
Investment portfolio
 
March 31, 2008 
unaudited
 
Bonds & notes — 91.36%
  
Principal amount
(000)
    
Market value
(000)
  
             
EUROS — 30.71%
            
German Government 4.50% 2009
   € 660    
US$ 1,051
  
German Government 5.25% 2011
     88,485       145,963  
German Government 5.00% 2012
     61,340       101,955  
German Government 3.75% 2013
     33,075       52,607  
German Government 4.50% 2013
     28,575       46,890  
German Government 4.25% 2014
     65,045       105,733  
German Government 3.50% 2016
     33,400       51,531  
German Government, Series 6, 4.00% 2016
     78,170       124,323  
German Government 1.50% 20161,2
     6,769       10,793  
German Government 3.75% 2017
     62,500       97,516  
German Government, Series 7, 4.00% 2018
     214,620       341,720  
German Government 6.25% 2024
     95,635       182,653  
German Government 6.25% 2030
     55,145       106,955  
German Government 4.75% 2034
     6,775       11,002  
Belgium (Kingdom of), Series 43, 4.25% 2014
     59,565       95,741  
Belgium (Kingdom of), Series 49, 4.00% 2017
     65,680       102,255  
Netherlands Government Eurobond 5.50% 2010
     25,000       41,074  
Netherlands Government Eurobond 4.25% 2013
     41,690       67,436  
Netherlands Government Eurobond 4.00% 2018
     5,650       8,842  
Netherlands Government Eurobond 7.50% 2023
     10,900       22,949  
Netherlands Government Eurobond 4.00% 2037
     4,550       6,453  
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.50% 20133
     25,500       41,024  
Deutsche Genossenschaftsbank-Hypothekenbank AG 4.00% 20163
     60,700       93,884  
Schering-Plough Corp. 5.375% 2014
     41,175       61,718  
Dexia Municipal Agency 3.50% 20093
     1,428       2,232  
Dexia Municipal Agency 4.50% 20173
     29,550       46,779  
French Government O.A.T. Eurobond 3.00% 20121,2
     3,262       5,589  
French Government O.A.T. Eurobond 5.00% 2016
     7,000       11,825  
French Government O.A.T. Eurobond Strip Principal 0% 2019
     7,500       7,279  
French Government O.A.T. Eurobond 2.441% 20201,2
     2,517       4,199  
French Government O.A.T. Eurobond 4.75% 2035
     10,800       17,307  
French Government O.A.T. Eurobond 4.00% 2055
     1,650       2,300  
Spanish Government 2.90% 2008
     9,310       14,607  
Spanish Government 4.20% 2013
     7,300       11,712  
Spanish Government 4.10% 2018
     14,000       21,910  
Bayerische Hypo- und Vereinsbank AG 6.625% 2010
     8,000       13,084  
Bayerische Hypo- und Vereinsbank AG 6.00% 2014
     1,410       2,194  
UniCredito Italiano SpA 3.95% 2016
     6,800       9,258  
UniCredito Italiano SpA, Series 172, 4.125% 20164
     460       697  
UniCredito Italiano SpA 5.75% 2017
     8,500       13,341  
Bayer AG 5.00% (undated)4
     26,035       35,468  
Rheinische Hypothekenbank Eurobond 4.25% 20083
     3,000       4,736  
Rheinische Hypothekenbank Eurobond 4.50% 20133
     15,900       25,577  
Société Générale 5.625% 2012
     2,000       3,207  
Société Générale 4.20% 2012
     6,000       9,145  
Société Générale 4.875% 20144
     2,250       3,506  
Société Générale 4.50% 20194
     1,640       2,422  
Société Générale 6.999% (undated)4
     7,350       10,865  
Veolia Environnement 4.875% 2013
     5,925       9,223  
Veolia Environnement 4.375% 2017
     5,200       7,491  
Veolia Environnement 6.125% 2033
     7,915       11,365  
Telecom Italia SpA 7.25% 2012
     4,930       7,928  
Telecom Italia SpA 7.75% 2033
     12,568       19,769  
Abu Dhabi National Energy Co. PJSC (TAQA) 4.375% 2013
     1,500       2,180  
Abu Dhabi National Energy Co. PJSC (TAQA) 4.375% 2013
     13,900       20,200  
NGG Finance PLC 6.125% 2011
     2,000       3,259  
National Grid Transco PLC 4.375% 2020
     12,280       16,304  
Gaz Capital SA 5.875% 2015
     3,250       4,613  
Gaz Capital SA 5.875% 2015
     7,500       10,645  
Gaz Capital SA 6.605% 2018
     3,000       4,234  
Santander Issuances, SA Unipersonal 5.435 20174
     7,500       11,572  
Santander Perpetual, SA Unipersonal 4.375% (undated)2,4
     5,840       7,767  
Resona Bank, Ltd. 3.75% 20154
     5,565       8,214  
Resona Bank, Ltd. 4.125% (undated)4
     4,935       6,588  
Resona Bank, Ltd 4.125% (undated)4
     2,500       3,337  
DaimlerChrysler International Finance BV 7.00% 2011
     9,675       16,166  
Saint-Gobain Nederland BV 5.00% 2010
     8,000       12,641  
Saint-Gobain Nederland BV 5.00% 2014
     1,925       2,906  
Metro Finance BV 4.625% 2011
     8,980       13,938  
Austria (Republic of) 4.30% 2017
     8,210       13,164  
GlaxoSmithKline Capital PLC 5.125% 2012
     1,000       1,594  
GlaxoSmithKline Capital PLC 5.625% 2017
     7,000       11,292  
Banque Centrale de Tunisie 4.75% 2011
     3,100       4,803  
Banque Centrale de Tunisie 4.75% 2011
     3,750       5,811  
Banque Centrale de Tunisie 6.25% 2013
     1,350       2,199  
E.ON International Finance BV 5.75% 2009
     750       1,199  
E.ON International Finance BV 5.125% 2012
     3,205       5,153  
E.ON International Finance BV 5.50% 2017
     4,010       6,446  
Shinsei Bank, Ltd. 3.75% 20164
     4,000       5,656  
Shinsei Bank, Ltd. 3.75% 20164
     4,790       6,772  
General Motors Corp. 7.25% 2013
     4,750       5,963  
General Motors Corp. 8.375% 2033
     5,900       6,267  
Sumitomo Mitsui Banking Corp. 4.375% 20144
     3,445       5,261  
Sumitomo Mitsui Banking Corp. 4.375% (undated)2,4
     5,475       6,553  
Pfizer Inc. 4.75% 2014
     7,000       11,120  
Deutsche Telekom International Finance BV 8.125% 20124
     5,160       8,863  
Koninklijke KPN NV 4.75% 2017
     6,250       8,706  
Barclays Bank PLC 4.50% 2019
     6,000       8,603  
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 3.625% 2012
     5,810       8,013  
PLD International Finance LLC 4.375% 2011
     5,200       7,439  
GIE PSA Trésorerie 5.875% 2011
     4,420       7,158  
Renault SA 4.375% 2013
     4,750       7,066  
Bouygues SA 4.375% 2014
     4,775       7,045  
France Télécom 7.25% 2013
     4,000       6,905  
Royal Bank of Scotland PLC 4.875% 2009
     750       1,179  
Royal Bank of Scotland PLC 6.00% 2013
     960       1,559  
Royal Bank of Scotland PLC 4.625% 20214
     3,000       4,089  
Northern Rock PLC, Series 7, 4.125% 20173
     4,650       6,806  
Croatian Government 5.00% 2014
     4,215       6,664  
BMW U.S. Capital LLC 4.625% 2013
     4,180       6,578  
British Telecommunications PLC 5.25% 2013
     4,250       6,542  
Volvo Treasury AB 5.00% 2017
     4,350       6,431  
ABN AMRO Bank NV 4.31% (undated)4
     5,250       6,369  
Standard Chartered Bank 5.875% 2017
     4,000       5,911  
AstraZeneca PLC 4.625% 2010
     3,600       5,700  
Merrill Lynch & Co., Inc. 4.625% 2018
     4,875       5,670  
Edcon Pty Ltd. 7.856% 20144
     2,000       2,100  
Edcon Pty Ltd. 7.856% 20144
     2,750       2,888  
Edcon Pty Ltd. 10.106% 20154
     750       539  
UPM-Kymmene Corp. 6.125% 2012
     3,200       4,788  
Delhaize Group 5.625% 2014
     3,000       4,444  
Rodamco Europe Finance BV, Series 5, 3.75% 2012
     3,030       4,366  
Lafarge 5.375% 2017
     3,000       4,318  
FCE Bank PLC 7.125% 2012
     2,850       3,606  
Anglian Water Services Financing PLC 4.625% 2013
     2,250       3,444  
Bulgaria (Republic of) 7.50% 2013
     1,638       2,860  
Bulgaria (Republic of) 7.50% 2013
     250       436  
Romania (Republic of) 8.50% 2012
     1,750       3,101  
Ukraine Government 4.95% 2015
     2,200       3,057  
International Endesa BV 5.375% 2013
     1,750       2,827  
Deutsche Bank AG 5.125% 2013
     1,700       2,684  
Fortum Oyj 4.625% 2010
     1,590       2,514  
Mizuho Financial Group (Cayman) Ltd. 4.75% 20144
     1,500       2,346  
Tesco PLC 4.75% 2010
     1,205       1,911  
Bank of Tokyo-Mitsubishi, Ltd., Series 13, 3.50% 20154
     1,100       1,621  
Commerzbank AG 6.125% 2011
     1,000       1,600  
Stora Enso Oyj 5.125% 2014
     1,000       1,343  
NXP BV and NXP Funding LLC 7.326% 20134
     1,000       1,255  
Edison SpA 5.125% 2010
     750       1,194  
AEGON NV 4.625% 2008
     750       1,184  
ING Verzekeringen NV 6.25% 20214
     750       1,174  
Finland (Republic of) 5.75% 2011
     500       834  
iesy Repository GmbH 10.125% 2015
     500       746  
Governor and Co. of the Bank of Ireland 6.45% 2010
     415       668  
RWE Finance BV 6.125% 2012
     250       418  
BNP Paribas 5.25% 20144
     250       395  
WDAC Intermediate Corp. 8.50% 2014
     125       144  
              2,699,001  
                 
                 
JAPANESE YEN — 7.19%
                
Japanese Government 0.90% 2008
   ¥ 4,839,150       48,590  
Japanese Government 1.80% 2010
     5,700,000       58,510  
Japanese Government 1.10% 2011
     90,000       914  
Japanese Government 1.30% 2011
     8,071,000       82,555  
Japanese Government 0.50% 2013
     2,180,000       21,575  
Japanese Government 1.50% 2014
     22,659,500       236,696  
Japanese Government 0.50% 20151,2
     2,537,031       24,605  
Japanese Government 1.70% 2016
     4,858,700       51,146  
Japanese Government 1.70% 2017
     1,045,250       10,940  
Japanese Government 1.20% 20171,2
     110,762       1,114  
Japanese Government 1.20% 20171,2
     4,492,671       44,971  
Japanese Government 2.30% 2035
     3,493,800       34,555  
KfW International Finance Inc. 1.75% 2010
     100,000       1,023  
KfW 1.35% 2014
     716,000       7,326  
European Investment Bank 1.40% 2017
     721,700       7,355  
              631,875  
                 
                 
BRITISH POUNDS — 4.09%
                
United Kingdom 5.75% 2009
   £ 1,750    
US$ 3,582
  
United Kingdom 4.75% 2010
     7,000       14,139  
United Kingdom 5.25% 2012
     13,525       28,185  
United Kingdom 5.00% 2014
     12,050       25,260  
United Kingdom 4.75% 2015
     15,710       32,428  
United Kingdom 8.00% 2015
     600       1,484  
United Kingdom 4.00% 2016
     27,150       53,154  
United Kingdom 2.50% 20161
     450       996  
United Kingdom 4.75% 2020
     28,915       58,702  
United Kingdom 8.00% 2021
     11,430       30,278  
United Kingdom 6.00% 2028
     19,865       46,864  
United Kingdom 4.75% 2038
     9,960       20,995  
United Kingdom 4.25% 2055
     250       500  
Abbey National PLC 7.50% (undated)4
     3,010       5,825  
Abbey National PLC 7.50% (undated)4
     450       878  
WT Finance (Australia) Pty Ltd., Westfield Europe Finance PLC, and WEA Finance LLC 5.50% 2017
     3,485       5,940  
Commerzbank AG 6.625% 2019
     3,000       5,459  
Tesco PLC 5.50% 2033
     2,640       4,726  
SLM Student Loan Trust, Series 2003-10, Class A-4, 5.15% 20393,5
     2,400       4,725  
HSBC Holdings PLC 6.375% 20224
     2,000       3,868  
Northern Rock PLC 5.625% 20154
     1,000       1,615  
Northern Rock PLC 6.375% 2019
     1,000       1,762  
Countrywide Home Loans, Inc. 5.875% 2008
     1,130       2,063  
Bayer AG, Series 41, 5.625% 2018
     1,100       2,042  
Halifax Building Society 11.00% 2014
     650       1,504  
General Electric Capital Corp. 5.625% 2031
     750       1,372  
UPM-Kymmene Corp. 6.625% 2017
     750       1,335  
              359,681  
                 
                 
AUSTRALIAN DOLLARS — 2.94%
                
Queensland Treasury Corp. 6.00% 2011
   $ A 7,450       6,657  
Queensland Treasury Corp. 6.00% 2015
     80,204       70,472  
Queensland Treasury Corp. 6.00% 2017
     24,610       21,490  
European Investment Bank 6.125% 2017
     80,955       70,462  
New South Wales Treasury Corp. 5.50% 2014
     62,950       54,001  
KfW 6.25% 2012
     38,300       33,849  
Countrywide Financial Corp. 6.25% 2010
     2,000       1,470  
              258,401  
                 
                 
MALAYSIAN RINGGIT — 2.85%
                
Malaysian Government 3.869% 2010
  
MYR 45,000
       14,199  
Malaysian Government 3.756% 2011
     242,450       76,542  
Malaysian Government 3.833% 2011
     142,000       44,980  
Malaysian Government 3.718% 2012
     235,374       74,337  
Malaysian Government 4.262% 2016
     25,380       8,213  
Malaysian Government 3.814% 2017
     101,950       31,901  
              250,172  
                 
                 
SWEDISH KRONOR — 2.76%
                
Swedish Government 5.00% 2009
  
SKr175,170
       29,709  
Swedish Government 5.25% 2011
     279,150       48,930  
Swedish Government 1.049% 20121
     27,462       4,569  
Swedish Government 4.00% 20123
     140,000       23,127  
Swedish Government 6.75% 2014
     299,425       58,260  
Swedish Government 5.00% 2020
     86,890       15,999  
Nordea Hypotek AB 4.00% 20123
     140,000       23,083  
AB Spintab 6.00% 2009
     131,900       22,516  
Stadshypotek AB 6.00% 20123
     79,000       14,152  
European Investment Bank 4.50% 2014
     15,000       2,548  
              242,893  
                 
                 
ISRAELI SHEKELS — 2.28%
                
Israeli Government 7.50% 20142
  
ILS267,083
       84,176  
Israeli Government 5.00% 20151,2
     22,108       7,310  
Israeli Government 6.50% 20162
     279,185       83,406  
Israeli Government 5.50% 20172
     90,132       25,055  
              199,947  
                 
                 
SINGAPORE DOLLARS — 2.16%
                
Singapore (Republic of) 4.375% 2009
   $ S 56,495       42,082  
Singapore (Republic of) 3.125% 2011
     157,915       121,017  
Singapore (Republic of) 3.75% 2016
     32,520       26,299  
              189,398  
                 
                 
POLISH ZLOTY — 2.02%
                
Polish Government, Series 608, 5.75% 2008
  
PLN 25,880
       11,627  
Polish Government 6.00% 2009
     45,220       20,264  
Polish Government 6.00% 2010
     68,235       30,593  
Polish Government 5.00% 2013
     210,945       90,158  
Polish Government 5.25% 2017
     58,210       24,892  
              177,534  
                 
                 
MEXICAN PESOS — 1.58%
                
United Mexican States Government, Series M, 7.50% 2012
  
MXN200,000
       18,930  
United Mexican States Government 9.00% 2012
     225,000       22,533  
United Mexican States Government, Series MI10, 9.50% 2014
     438,663       45,840  
United Mexican States Government, Series M10, 8.00% 2015
     75,000       7,289  
United Mexican States Government, Series M20, 10.00% 2024
     334,453       38,795  
United Mexican States Government, Series M30, 10.00% 2036
     30,000       3,612  
América Móvil, SAB de CV 8.46% 2036
     15,000       1,400  
              138,399  
                 
                 
SOUTH KOREAN WON — 1.03%
                
South Korean Government 4.50% 2008
  
KRW 9,885,000
       9,961  
South Korean Government 5.00% 2011
     14,671,560       14,782  
South Korean Government 4.25% 2014
     37,784,900       36,271  
South Korean Government 5.00% 2016
     23,400,210       23,268  
South Korean Government 2.75% 20171,2
     5,818,446       5,905  
              90,187  
                 
                 
DANISH KRONER — 1.02%
                
Nykredit 4.00% 20353
  
DKr170,915
       32,466  
Nykredit 6.00% 20383
     68,922       14,603  
Nykredit 5.00% 20383
     161,830       32,797  
Nordea Kredit 5.00% 20383
     48,128       9,935  
              89,801  
                 
                 
TURKISH LIRE — 0.97%
                
Turkey (Republic of) Treasury Bill 0% 20082
  
TRY22,380
       16,053  
Turkey (Republic of) 15.00% 20102
     20,000       14,291  
Turkey (Republic of) 14.00% 20112
     3,650       2,477  
Turkey (Republic of) 16.00% 20122
     13,870       9,707  
Turkey (Republic of) 10.00% 20121,2
     57,781       42,700  
              85,228  
                 
                 
EGYPTIAN POUNDS — 0.95%
                
Egypt (Arab Republic of) Treasury Bill 0% 20082
  
EGP 525
       96  
Egypt (Arab Republic of) Treasury Bill 0% 20082
     130,000       23,714  
Egypt (Arab Republic of) Treasury Bill 0% 20082
     10,000       1,806  
Egypt (Arab Republic of) Treasury Bill 0% 20082
     48,000       8,626  
Egypt (Arab Republic of) Treasury Bill 0% 20082
     19,625       3,515  
Egypt (Arab Republic of) Treasury Bill 0% 20082
     31,000       5,641  
Egypt (Arab Republic of) 9.10% 20102
     39,650       7,320  
Egypt (Arab Republic of) 9.10% 20102
     1,955       362  
Egypt (Arab Republic of) 11.50% 20112
     5,865       1,157  
Egypt (Arab Republic of) 9.10% 20122
     82,870       15,119  
Egypt (Arab Republic of) 8.85% 20132
     59,000       10,599  
Egypt (Arab Republic of) 11.625% 20142
     18,535       3,729  
Egypt (Arab Republic of) 9.20% 20142
     8,925       1,625  
              83,309  
                 
                 
BRAZILIAN REAIS — 0.74%
                
Brazilian Treasury Bill 6.00% 20101,2
  
BRL15,479
       8,430  
Brazilian Treasury Bill 6.00% 20151,2
     26,768       13,831  
Brazil (Federal Republic of) Global 12.50% 2016
     775       477  
Brazilian Treasury Bill 6.00% 20171,2
     4,852       2,478  
Brazil (Federal Republic of) 10.00% 20172
     67,120       32,019  
Brazil (Federal Republic of) Global 12.50% 20222
     3,500       2,187  
Brazil (Federal Republic of) Global 10.25% 2028
     11,120       5,944  
              65,366  
                 
                 
NORWEGIAN KRONER — 0.64%
                
Norwegian Government 5.50% 2009
  
NKr 85,425
       16,873  
Norwegian Government 6.50% 2013
     183,900       39,696  
              56,569  
                 
                 
INDONESIAN RUPIAH — 0.59%
                
Indonesia (Republic of) 10.00% 2011
  
IDR 4,000,000
       434  
Indonesia (Republic of) 14.275% 2013
     69,100,000       8,664  
Indonesia (Republic of) 12.50% 2013
     213,050,000       24,915  
Indonesia (Republic of) 11.00% 2014
     35,000,000       3,838  
Indonesia (Republic of) 11.00% 2020
     37,975,000       3,901  
Indonesia (Republic of) 12.80% 2021
     69,133,000       7,917  
Indonesia (Republic of) 12.90% 2022
     15,705,000       1,809  
Indonesia (Republic of) 11.00% 2025
     1,258,000       126  
              51,604  
                 
                 
CANADIAN DOLLARS — 0.28%
                
Canadian Government 5.50% 2010
   $ C13,755       14,210  
Canadian Government 5.25% 2012
     6,000       6,377  
Canadian Government 5.75% 2029
     2,250       2,757  
Manitoba Telecom Services Inc., Series 4, 5.85% 2009
     1,000       990  
              24,334  
                 
                 
HUNGARIAN FORINT — 0.19%
                
Hungarian Government 7.25% 2012
  
HUF3,010,800
       16,914  
                 
                 
URUGUAYAN PESOS — 0.16%
                
Uruguay (Republic of) 5.00% 20181,2
  
UYU40,058
       2,175  
Uruguay (Republic of) 4.25% 20271,2,3
     144,287       7,688  
Uruguay (Republic of) 3.70% 20371,2,3
     99,820       4,535  
              14,398  
                 
                 
SOUTH AFRICAN RAND — 0.10%
                
South Africa (Republic of), Series 204, 8.00% 2018
  
ZAR41,250
       4,687  
South Africa (Republic of), Series 197, 7.676% 20231,2
     23,237       4,148  
              8,835  
                 
                 
ARGENTINE PESOS — 0.09%
                
Argentina (Republic of) 5.83% 20331,2,3,6
  
ARS19,241
       4,030  
Argentina (Republic of) GDP-Linked 2035
     40,842       1,289  
Argentina (Republic of) 0.63% 20381,2,3
     35,594       2,828  
              8,147  
                 
                 
DOMINICAN PESOS — 0.06%
                
Cervecería Nacional Dominicana, C. por A. 16.00% 20122
  
DOP122,949
       3,444  
Cervecería Nacional Dominicana, C. por A. 16.00% 20122
     72,130       2,021  
              5,465  
                 
                 
COLOMBIAN PESOS — 0.01%
                
Colombia (Republic of) Global 11.75% 2010
  
COP753,000
       420  
                 
                 
U.S. DOLLARS — 25.95%
                
U.S. Treasury 3.375% 2008
  
US$16,015
       16,213  
U.S. Treasury 3.375% 2008
     980       994  
U.S. Treasury 4.875% 2008
     13,741       13,934  
U.S. Treasury 5.625% 2008
     1,750       1,759  
U.S. Treasury 5.50% 2009
     18,560       19,381  
U.S. Treasury 5.75% 2010
     44,000       48,231  
U.S. Treasury 4.25% 2011
     13,820       14,783  
U.S. Treasury 4.50% 2011
     2,960       3,193  
U.S. Treasury 4.875% 2011
     780       854  
U.S. Treasury 2.375% 20111,2
     6,188       6,653  
U.S. Treasury 4.875% 2012
     59,050       65,199  
U.S. Treasury 3.00% 20121,2
     11,750       13,168  
U.S. Treasury 3.875% 2013
     6,000       6,406  
U.S. Treasury 4.25% 2013
     1,330       1,448  
U.S. Treasury 4.00% 2014
     20,540       22,154  
U.S. Treasury 2.00% 20141,2
     31,576       34,191  
U.S. Treasury 5.125% 2016
     7,250       8,256  
U.S. Treasury 4.625% 2017
     30,930       33,955  
U.S. Treasury 8.875% 2017
     5,860       8,348  
U.S. Treasury 2.375% 20171,2
     12,035       13,423  
U.S. Treasury 7.875% 2021
     1,000       1,389  
U.S. Treasury 8.00% 2021
     7,760       10,956  
U.S. Treasury 5.25% 2029
     5,225       5,900  
U.S. Treasury 3.375% 20321,2
     1,177       1,544  
U.S. Treasury 4.50% 2036
     1,680       1,736  
Fannie Mae 5.25% 2012
     39,500       41,270  
Fannie Mae 5.00% 20173
     1,011       1,029  
Fannie Mae 5.00% 20193
     346       351  
Fannie Mae, Series 2001-4, Class GA, 10.22% 20253,4
     24       27  
Fannie Mae 6.00% 20263
     1,205       1,241  
Fannie Mae 5.50% 20343
     1,018       1,033  
Fannie Mae 4.50% 20353
     2,325       2,243  
Fannie Mae 4.50% 20353
     2,922       2,819  
Fannie Mae 5.50% 20353
     7,036       7,140  
Fannie Mae 6.00% 20363
     4,488       4,602  
Fannie Mae 6.50% 20363
     6,827       7,035  
Fannie Mae, Series 2006-49, Class PA, 6.00% 20363
     1,583       1,637  
Fannie Mae, Series 2006-56, Class OG, principal only, 0% 20363
     6,437       4,999  
Fannie Mae, Series 2006-96, Class MO, principal only, 0% 20363
     5,225       4,275  
Fannie Mae 5.00% 20373
     1,892       1,874  
Fannie Mae 5.50% 20373
     936       946  
Fannie Mae 6.00% 20373
     15,906       16,325  
Fannie Mae 6.00% 20373
     7,127       7,315  
Fannie Mae 6.00% 20373
     10,786       11,070  
Fannie Mae 6.00% 20373
     14,000       14,356  
Fannie Mae 6.50% 20373
     1,782       1,848  
Fannie Mae 6.50% 20373
     4,115       4,272  
Fannie Mae 6.50% 20373
     6,490       6,730  
Fannie Mae 5.50% 20373
     4,210       4,215  
Fannie Mae 5.50% 20373
     6,022       6,030  
Fannie Mae 6.50% 20373
     2,416       2,490  
Fannie Mae 6.00% 20373
     17,620       18,045  
Fannie Mae 6.50% 20383
     16,370       16,975  
Fannie Mae 5.325% 20383,4
     13,293       13,554  
Fannie Mae 4.522% 20383,4
     3,051       3,073  
Fannie Mae 4.443% 20383,4
     7,568       7,595  
Fannie Mae 6.50% 20473
     4,865       4,993  
Fannie Mae 6.50% 20473
     2,878       2,954  
Fannie Mae 6.50% 20473
     2,081       2,136  
Fannie Mae 7.00% 20473
     1,950       2,026  
Fannie Mae 6.50% 20483
     10,140       10,407  
Freddie Mac, Series 3171, Class MO, principal only, 0% 20363
     6,462       5,110  
Freddie Mac, Series 3213, Class OG, principal only, 0% 20363
     6,882       5,388  
Freddie Mac 5.50% 20373
     13,849       13,995  
Freddie Mac 5.50% 20373
     7,500       7,579  
Freddie Mac 6.00% 20373
     12,425       12,753  
Freddie Mac 6.00% 20373
     2,522       2,589  
Freddie Mac 4.78% 20373,4
     5,713       5,783  
Freddie Mac 5.724% 20373,4
     1,938       1,984  
Freddie Mac, Series 3292, Class BO, principal only, 0% 20373
     1,885       1,466  
Freddie Mac 5.00% 20383
     4,810       4,765  
Freddie Mac 5.00% 20383
     9,395       9,307  
Freddie Mac 5.00% 20383
     9,570       9,486  
Freddie Mac 5.50% 20383
     7,460       7,531  
Freddie Mac 4.679% 20383,4
     9,471       9,522  
Freddie Mac 5.478% 20383,4
     13,500       13,674  
Freddie Mac 4.952% 20383,4
     2,580       2,608  
Federal Home Loan Bank 5.125% 2008
     4,970       5,018  
Federal Home Loan Bank 5.125% 2013
     15,000       16,242  
Federal Home Loan Bank 5.625% 2016
     11,875       12,382  
Gaz Capital SA, Series 7, 6.212% 2016
     13,000       12,057  
Gaz Capital SA 6.51% 20225
     5,310       4,746  
Gaz Capital SA, Series 9, 6.51% 2022
     2,800       2,503  
Open Joint Stock Co. Gazprom, Series 2, 8.625% 20345
     2,000       2,280  
Gaz Capital SA 7.288% 20375
     11,875       10,891  
Argentina (Republic of) 1.933% 20122,3,4
     7,775       4,120  
Argentina (Republic of) 7.00% 20152
     14,800       11,322  
Argentina (Republic of) GDP-Linked 2035
     88,270       10,637  
CS First Boston Mortgage Securities Corp., Series 2006-2R, Class A-PO, principal only, 0% 20362,3,5
     10,178       7,039  
CS First Boston Mortgage Securities Corp., Series 2005-C1, Class A-3, 4.813% 20383
     5,000       4,769  
CS First Boston Mortgage Securities Corp., Series 2007-5, Class 1-A-9, 7.00% 20372,3
     5,446       3,812  
CS First Boston Mortgage Securities Corp., Series 2004-C5, Class A-3, 4.499% 20373
     2,300       2,208  
CS First Boston Mortgage Securities Corp., Series 2006-C2, Class A-3, 5.658% 20393,4
     1,905       1,918  
CS First Boston Mortgage Securities Corp., Series 2001-CK6, Class A-3, 6.387% 20363
     1,625       1,663  
CS First Boston Mortgage Securities Corp., Series 2001-CP4, Class A-4, 6.18% 20353
     1,325       1,349  
CS First Boston Mortgage Securities Corp., Series 2005-7, Class III-A-1, 5.00% 20203
     637       571  
CS First Boston Mortgage Securities Corp., Series 2004-C4, Class A-4, 4.283% 20393
     500       478  
CS First Boston Mortgage Securities Corp., Series 2003-29, Class V-A-1, 7.00% 20333
     176       167  
CS First Boston Mortgage Securities Corp., Series 2001-CF2, Class A-3, 6.238% 20343
     5       5  
TuranAlem Finance BV 8.00% 2014
     5,470       4,540  
TuranAlem Finance BV 8.50% 20155
     1,935       1,608  
TuranAlem Finance BV 8.50% 2015
     8,015       6,662  
TuranAlem Finance BV 8.25% 20375
     6,775       5,364  
TuranAlem Finance BV, Series 8, 8.25% 2037
     5,205       4,121  
British Telecommunications PLC 5.95% 2018
     15,400       14,949  
British Telecommunications PLC 9.125% 20304
     4,600       5,719  
Santander Issuances, SA Unipersonal 2.902% 20164,5
     2,100       1,915  
Santander Issuances, SA Unipersonal 5.805% 20164,5
     5,400       5,362  
Santander Perpetual, SA Unipersonal 6.671% (undated)4,5
     11,400       10,291  
Abbey National PLC 6.70% (undated)4
     2,472       2,390  
Indonesia (Republic of) 6.75% 20145
     1,250       1,316  
Indonesia (Republic of) 6.875% 20175
     1,000       1,050  
Indonesia (Republic of) 6.875% 20185
     3,500       3,684  
Indonesia (Republic of) 6.625% 20375
     4,000       3,690  
Indonesia (Republic of) 7.75% 20385
     9,000       9,360  
HSBK (Europe) BV 7.75% 2013
     4,765       4,567  
HSBK (Europe) BV 7.25% 20175
     13,215       11,625  
HSBK (Europe) BV 7.25% 2017
     1,860       1,636  
Abu Dhabi National Energy Co. PJSC (TAQA) 5.62% 20125
     1,750       1,806  
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20165
     14,480       14,393  
Abu Dhabi National Energy Co. PJSC (TAQA) 6.50% 20365
     1,250       1,128  
Russian Federation 7.50% 20303
     14,716       16,988  
Wells Fargo Mortgage-backed Securities Trust, Series 2005-1, Class I-A-1, 4.75% 20203
     9,327       9,046  
Wells Fargo Mortgage-backed Securities Trust, Series 2006-1, Class A-3, 5.00% 20213
     4,806       4,694  
Wells Fargo Mortgage-backed Securities Trust, Series 2004-7, Class II-A-1, 4.50% 20193
     2,899       2,792  
Royal Bank of Scotland Group PLC 6.99% (undated)4,5
     19,390       16,487  
UniCredito Italiano SpA 6.00% 20175
     9,875       9,800  
UniCredito Italiano SpA 5.584% 20174,5
     2,730       2,761  
HVB Funding Trust I 8.741% 20312,5
     4,250       3,759  
Scottish Power PLC 5.375% 2015
     12,700       12,751  
Scottish Power PLC 5.81% 2025
     3,725       3,442  
Korea Development Bank 5.30% 2013
     15,700       16,103  
Vodafone Group PLC 5.625% 2017
     9,100       8,864  
Vodafone Group PLC 6.15% 2037
     7,600       7,107  
Target Corp. 5.125% 2013
     2,000       2,054  
Target Corp. 6.00% 2018
     10,875       11,153  
Target Corp. 7.00% 2038
     2,600       2,681  
Development Bank of Singapore Ltd. 7.875% 20105
     10,250       11,089  
Development Bank of Singapore Ltd. 7.125% 20115
     3,800       4,150  
Resona Bank, Ltd. 5.85% (undated)2,4,5
     19,035       14,867  
Koninklijke KPN NV 8.00% 2010
     8,400       9,025  
Koninklijke KPN NV 8.375% 2030
     4,900       5,622  
AstraZeneca PLC 5.40% 2012
     1,250       1,320  
AstraZeneca PLC 5.90% 2017
     12,500       13,237  
Singapore Telecommunications Ltd. 6.375% 20115
     8,540       9,239  
Singapore Telecommunications Ltd. 7.375% 20315
     4,500       4,770  
C10 Capital (SPV) Ltd. 6.722% (undated)4,5
     13,125       12,169  
C8 Capital (SPV) Ltd. 6.64% (undated)4,5
     1,970       1,824  
Turkey (Republic of) 7.25% 2015
     6,325       6,689  
Turkey (Republic of) 6.75% 20182
     3,000       2,959  
Turkey (Republic of) 8.00% 2034
     4,200       4,326  
Enersis SA 7.375% 2014
     11,935       13,181  
General Electric Co. 5.00% 2013
     2,775       2,877  
General Electric Co. 5.25% 2017
     10,200       10,205  
Barclays Bank PLC 5.926% (undated)2,4,5
     3,185       2,592  
Barclays Bank PLC 7.434% (undated)4,5
     11,525       10,437  
Ras Laffan Liquefied Natural Gas Co. Ltd. 3.437% 20093,5
     900       905  
Ras Laffan Liquefied Natural Gas II 5.298% 20203,5
     4,725       4,631  
Ras Laffan Liquefied Natural Gas III 5.838% 20273,5
     8,000       7,305  
Nextel Communications, Inc., Series E, 6.875% 2013
     6,725       5,317  
Nextel Communications, Inc., Series F, 5.95% 2014
     3,325       2,463  
Sprint Capital Corp. 6.875% 2028
     4,050       3,024  
Sprint Capital Corp. 8.75% 2032
     2,125       1,800  
Ukraine Government 6.58% 2016
     5,000       4,981  
Ukraine Government 6.75% 20175
     3,100       3,058  
Ukraine Government 6.75% 2017
     4,600       4,538  
CSAB Mortgage-backed Trust, Series 2007-1, Class 4-A-8, 7.00% 20372,3
     18,428       12,531  
Société Générale 5.75% 20162,5
     7,510       7,457  
Société Générale 5.922% (undated)4,5
     6,200       5,070  
American Tower Corp. 7.125% 2012
     320       329  
American Tower Corp. 7.50% 2012
     475       488  
American Tower Corp. 7.00% 20175
     11,400       11,457  
ORIX Corp. 5.48% 2011
     12,190       11,814  
State of Qatar 9.75% 2030
     7,250       11,310  
Kraft Foods Inc. 6.125% 2018
     11,100       11,113  
Williams Companies, Inc. 6.729% 20104,5
     225       231  
Williams Companies, Inc. 7.875% 2021
     4,865       5,297  
Transcontinental Gas Pipe Line Corp. 7.25% 2026
     575       592  
Williams Companies, Inc. 8.75% 2032
     4,030       4,675  
Washington Mutual, Inc. 5.50% 2011
     1,375       1,183  
Washington Mutual Bank, FA, Series 16, 5.125% 20152
     650       501  
Washington Mutual, Inc. 5.25% 20172
     1,500       1,170  
Washington Mutual, Inc. 7.25% 2017
     1,250       980  
Washington Mutual Preferred Funding II Ltd. 6.665% (undated)2,4,5
     3,000       1,695  
Washington Mutual Preferred Funding IV Ltd. 9.75% (undated)4,5
     2,500       1,915  
Washington Mutual Preferred Funding III Ltd. 6.895% (undated)2,4,5
     5,900       3,334  
AmeriCredit Automobile Receivables Trust, Series 2006-R-M, Class A-2, MBIA insured, 5.42% 20113
     5,750       5,598  
AmeriCredit Automobile Receivables Trust, Series 2007-C-M, Class A-3-A, MBIA insured, 5.42% 20123
     4,000       3,860  
AmeriCredit Automobile Receivables Trust, Series 2007-D-F, Class A-4-A, FSA insured, 5.56% 20143
     1,250       1,241  
Citigroup Inc. 6.125% 2017
     1,475       1,475  
Citigroup Capital XXI 8.30% 20574
     9,230       9,120  
Comcast Cable Communications, Inc. 6.75% 2011
     1,020       1,061  
Comcast Corp. 6.30% 2017
     3,000       3,042  
Comcast Corp. 6.95% 2037
     5,035       5,061  
National Grid PLC 6.30% 2016
     8,825       9,080  
Nielsen Finance LLC, Term Loan B, 5.346% 20133,4,7
     422       381  
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014
     5,300       5,300  
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20168
     5,330       3,398  
Lehman Brothers Holdings Inc. 6.75% 20172
     2,500       2,498  
Lehman Brothers Holdings Inc. 6.50% 20172
     6,590       6,517  
Intergen Power 9.00% 20175
     8,525       8,951  
CVS Corp. 7.77% 20122,3,5
     738       779  
CVS Corp. 5.298% 20273,5
     983       934  
CVS Corp. 6.036% 20283,5
     972       929  
CVS Caremark Corp. 6.943% 20302,3,5
     5,828       5,892  
Banc of America Commercial Mortgage Inc., Series 2005-5, Class A-3B, 5.228% 20453,4
     5,000       4,810  
Banc of America Commercial Mortgage Inc., Series 2005-1, Class A-4, 4.989% 20423,4
     3,000       2,939  
Banc of America Commercial Mortgage Inc., Series 2001-1, Class A-2, 6.503% 20363
     652       668  
Bausch & Lomb Inc. 9.875% 20155
     8,250       8,415  
Charles Schwab Corp., Series A, 6.375% 2017
     2,775       2,778  
Schwab Capital Trust I 7.50% 20374
     5,960       5,557  
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 6.596% 20143,4,7
     1,047       956  
Texas Competitive Electric Holdings Co. LLC 10.25% 20155
     3,480       3,484  
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 20155
     3,780       3,785  
CCH II, LLC and CCH II Capital Corp. 10.25% 2010
     1,550       1,418  
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20125
     1,425       1,315  
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013
     1,990       1,711  
Charter Communications Operating, LLC, Term Loan B, 5.26% 20143,4,7
     898       761  
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20145
     475       470  
CCH I, LLC and CCH I Capital Corp. 11.00% 2015
     3,350       2,345  
BBVA International SA Unipersonal 5.919% (undated)2,4,5
     10,350       7,919  
Tenet Healthcare Corp. 6.375% 2011
     845       767  
Tenet Healthcare Corp. 7.375% 2013
     825       740  
Tenet Healthcare Corp. 9.875% 2014
     5,700       5,543  
Tenet Healthcare Corp. 9.25% 2015
     900       846  
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 5-A-1, 5.918% 20363,4
     4,672       3,445  
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-4, Class 6-A, 5.924% 20363,4
     3,252       2,638  
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-6, Class 3-A-1, 5.896% 20373,4
     1,885       1,407  
Vale Overseas Ltd. 6.875% 2036
     8,000       7,846  
Standard Chartered Bank 6.40% 20175
     3,750       3,829  
Standard Chartered PLC 6.409% (undated)2,4,5
     5,000       3,923  
Commercial Mortgage Trust, Series 2003-LNB1, Class A-2, 4.084% 20383
     8,000       7,395  
Enterprise Products Operating LP, Series B, 5.00% 2015
     2,000       1,913  
Enterprise Products Operating LP 8.375% 20664
     1,210       1,179  
Enterprise Products Operating LP 7.034% 20684
     5,005       4,256  
Merrill Lynch Mortgage Investors, Inc., Series 2006-A1, Class II-A-1, 6.138% 20362,3,4
     8,291       7,331  
Goldman Sachs Group, Inc. 6.15% 2018
     4,750       4,752  
Goldman Sachs Group, Inc. 6.75% 2037
     2,750       2,566  
Enbridge Energy Partners, LP 6.50% 20185
     7,320       7,281  
American Tower Trust I, Series 2007-1A, Class A-FX, 5.42% 20372,3,5
     5,600       5,216  
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20372,3,5
     1,150       936  
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20372,3,5
     1,330       1,105  
Univision Communications, Inc., Second Lien Term Loan B, 5.204% 20093,4,7
     500       474  
Univision Communications Inc. 7.85% 2011
     1,715       1,531  
Univision Communications, Inc., First Lien Term Loan B, 5.494% 20143,4,7
     780       618  
Univision Communications Inc. 9.75% 20155,6
     7,450       4,545  
Hospitality Properties Trust 6.85% 2012
     600       566  
Hospitality Properties Trust 6.75% 2013
     690       679  
Hospitality Properties Trust 5.125% 2015
     1,000       871  
Hospitality Properties Trust 5.625% 2017
     1,390       1,117  
Hospitality Properties Trust 6.70% 2018
     4,455       3,823  
Residential Accredit Loans, Inc., Series 2003-QS16, Class A-1, 5.00% 20183
     2,958       2,835  
Residential Accredit Loans, Inc., Series 2007-QS9, Class A-33, 6.50% 20373
     1,183       1,025  
Residential Accredit Loans, Inc., Series 2006-QS1, Class A-3, 5.75% 20363
     1,064       1,023  
Residential Accredit Loans, Inc., Series 2007-QS11, Class A-1, 7.00% 20372,3
     1,663       1,164  
Residential Accredit Loans, Inc., Series 2004-QS16, Class 1-A-1, 5.50% 20343
     541       466  
Residential Accredit Loans, Inc., Series 2006-QA1, Class A-III-1, 6.251% 20363,4
     597       449  
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2005-LDP4, Class A-2, 4.79% 20423
     2,890       2,856  
J.P. Morgan Chase Commercial Mortgage Securities Trust, Series 2006-LDP6, Class A-4, 5.475% 20433,4
     2,575       2,551  
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2006-LDP7, Class A-4, 5.875% 20453,4
     750       750  
J.P. Morgan Chase Commercial Mortgage Securities Corp., Series 2004-CIBC10, Class A-2, 3.89% 20373
     647       640  
Drivetime Auto Owner Trust, Series 2006-B, Class A-3, MBIA insured, 5.227% 20123,4,5
     7,000       6,785  
SBC Communications Inc. 5.625% 2016
     1,500       1,507  
AT&T Inc. 5.50% 2018
     4,000       3,924  
SBC Communications Inc. 6.45% 2034
     1,275       1,250  
Banco Mercantil del Norte, SA 6.135% 20165
     2,355       2,321  
Banco Mercantil del Norte, SA 6.862% 20214,5
     4,600       4,248  
Countrywide Home Loans, Inc., Series L, 3.25% 2008
     275       270  
Countrywide Home Loans, Inc., Series M, 4.125% 2009
     500       451  
Countrywide Financial Corp., Series A, 4.50% 2010
     100       89  
Countrywide Financial Corp., Series B, 5.80% 2012
     6,275       5,690  
IndyMac IMSC Mortgage Loan Trust, Series 2007-F3, Class 2-A-1, 6.50% 20372,3
     5,486       3,840  
IndyMac IMSC Mortgage Loan Trust, Series 2007-F2, Class 2-A-1, 6.50% 20372,3
     3,686       2,580  
NXP BV and NXP Funding LLC 7.875% 2014
     3,325       3,059  
NXP BV and NXP Funding LLC 9.50% 2015
     3,970       3,275  
Wells Fargo & Co. 3.50% 2008
     625       625  
Wells Fargo Bank, National Assn. 5.75% 2016
     5,500       5,708  
Constellation Brands, Inc. 8.375% 2014
     1,000       1,035  
Constellation Brands, Inc. 7.25% 2017
     5,410       5,275  
AOL Time Warner Inc. 7.625% 2031
     2,240       2,349  
Time Warner Inc. 6.50% 2036
     4,290       3,948  
Edison Mission Energy 7.50% 2013
     1,325       1,365  
Edison Mission Energy 7.75% 2016
     150       155  
Midwest Generation, LLC, Series B, 8.56% 20163
     2,767       3,003  
Edison Mission Energy 7.20% 2019
     1,125       1,117  
Edison Mission Energy 7.625% 2027
     650       614  
Telecom Italia Capital SA, Series B, 5.25% 2013
     6,550       6,128  
Merrill Lynch Mortgage Trust, Series 2006-C1, Class A-3, 5.658% 20393,4
     3,770       3,676  
Merrill Lynch Mortgage Trust, Series 2005-CIP1, Class A-3-A, 4.949% 20383,4
     2,470       2,343  
Dominican Republic 9.50% 20113
     1,410       1,484  
Dominican Republic 9.04% 20183,5
     2,459       2,625  
Dominican Republic 9.04% 20183
     1,771       1,890  
PSEG Power LLC 7.75% 2011
     3,325       3,585  
PSEG Power LLC 8.625% 2031
     1,945       2,392  
Ford Motor Credit Co. 7.375% 2009
     325       296  
Ford Motor Credit Co. 9.75% 20104
     2,150       1,916  
Ford Motor Credit Co. 7.375% 2011
     2,100       1,752  
Ford Motor Co. 6.50% 2018
     1,326       895  
Ford Motor Co. 8.875% 2022
     1,360       1,064  
Northern Rock PLC 5.60% (undated)2,4,5
     3,635       2,090  
Northern Rock PLC 6.594% (undated)2,4,5
     6,480       3,726  
Gabonese Republic 8.20% 20175
     5,500       5,796  
GSR Mortgage Loan Trust, Series 2004-10F, Class 1-A-5, 4.50% 20193
     5,125       4,936  
GSR Mortgage Loan Trust, Series 2004-15F, Class 5A-1, 5.50% 20203
     853       842  
HSBC Holdings PLC 6.50% 2037
     6,070       5,777  
EOG Resources, Inc. 5.875% 2017
     5,500       5,776  
Kroger Co. 6.40% 2017
     4,000       4,229  
Kroger Co. 6.90% 2038
     1,500       1,528  
PCCW-HKT Capital No. 3 Ltd. 5.25% 20155
     6,300       5,676  
International Lease Finance Corp. 5.00% 2010
     1,000       1,001  
American General Finance Corp., Series J, 6.90% 2017
     1,990       1,948  
American International Group, Inc., Series G, 5.85% 2018
     2,250       2,212  
American International Group, Inc., Series A-1, 6.25% 20874
     420       341  
Chase Issuance Trust, Series 2007-A9, Class A, 2.848% 20143,4
     5,700       5,467  
Stora Enso Oyj 6.404% 20165
     2,285       2,022  
Stora Enso Oyj 7.25% 20365
     4,295       3,402  
Tesco PLC 5.50% 20175
     3,350       3,424  
Tesco PLC 6.15% 20375
     2,000       1,945  
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR18, Class 1-A1, 5.346% 20373,4
     3,626       3,518  
WaMu Mortgage Pass-Through Certificates Trust, Series 2003-S6, Class II-A-3, 4.75% 20183
     1,862       1,806  
TransCanada PipeLines Ltd. 6.35% 20674
     5,880       5,206  
CHL Mortgage Pass-Through Trust, Series 2003-50, Class A-1, 5.00% 20183
     3,451       3,370  
CHL Mortgage Pass-Through Trust, Series 2005-HYB8, Class 4-A-1, 5.61% 20353,4
     1,387       982  
CHL Mortgage Pass-Through Trust, Series 2006-HYB5, Class 3-A-1B, 5.923% 20363,4
     928       658  
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20193
     1,288       1,240  
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20203
     412       397  
Continental Airlines, Inc., Series 1999-2, Class B, 7.566% 20213
     600       552  
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20223
     2,776       2,784  
Washington Mutual Master Note Trust, Series 2007-A4A, Class A-4, 5.20% 20143,5
     5,115       4,968  
Lehman Mortgage Trust, Series 2007-7, Class 6-A4, 7.00% 20373
     3,069       2,709  
Lehman Mortgage Trust, Series 2007-8, Class 3-A1, 7.25% 20373
     2,489       2,252  
Abbott Laboratories 5.875% 2016
     4,200       4,484  
Abbott Laboratories 5.60% 2017
     435       456  
Capital One Multi-asset Execution Trust, Series 2005-1, Class C, 3.218% 20133,4
     5,500       4,930  
Corporación Andina de Fomento 5.75% 2017
     5,025       4,921  
Michaels Stores, Inc., Term Loan B, 5.438% 20133,4,7
     248       209  
Michaels Stores, Inc. 10.00% 2014
     4,425       3,894  
Michaels Stores, Inc. 11.375% 2016
     975       770  
Mohegan Tribal Gaming Authority 6.375% 2009
     970       975  
Mohegan Tribal Gaming Authority 7.125% 2014
     4,500       3,713  
Freeport-McMoRan Copper & Gold Inc. 8.25% 2015
     1,050       1,110  
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017
     3,300       3,510  
Capital One Auto Finance Trust, Series 2007-B, Class A-3-A, MBIA insured, 5.03% 20123
     4,750       4,614  
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20143,5
     4,625       4,469  
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20143
     125       121  
Skandinaviska Enskilda Banken AB 6.875% 2009
     500       513  
Skandinaviska Enskilda Banken AB 5.471% (undated)2,4,5
     5,000       4,043  
Navios Maritime Holdings Inc. 9.50% 2014
     4,425       4,431  
First Data Corp., Term Loan B2, 5.349% 20143,4,7
     4,808       4,342  
Pakistan (Republic of) 7.125% 20165
     1,500       1,301  
Pakistan (Republic of) 7.125% 2016
     3,500       3,036  
Dex Media, Inc., Series B, 8.00% 2013
     750       551  
R.H. Donnelley Corp., Series A-1, 6.875% 2013
     1,310       806  
R.H. Donnelley Corp. 8.875% 20175
     4,720       2,974  
TL Acquisitions, Inc., Term Loan B, 5.20% 20143,4,7
     1,318       1,134  
Thomson Learning 10.50% 20155
     2,575       2,227  
Thomson Learning 0%/13.25% 20155,8
     1,295       932  
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7-A-1, 5.00% 20193
     4,370       4,268  
Centex Corp. 5.25% 2015
     1,735       1,347  
Centex Corp. 6.50% 2016
     3,370       2,818  
Liberty Mutual Group Inc. 6.50% 20355
     535       490  
Liberty Mutual Group Inc. 7.50% 20365
     1,815       1,724  
Liberty Mutual Group Inc., Series A, 7.80% 20875
     2,275       1,923  
CanWest Media Inc., Series B, 8.00% 2012
     3,356       3,205  
CanWest MediaWorks Inc. 9.25% 20155
     1,000       925  
Freescale Semiconductor, Inc., Term Loan B, 4.869% 20133,4,7
     546       463  
Freescale Semiconductor, Inc. 9.125% 20146
     3,400       2,499  
Freescale Semiconductor, Inc. 10.125% 2016
     1,625       1,105  
Biogen Idec Inc. 6.00% 2013
     3,000       3,039  
Biogen Idec Inc. 6.875% 2018
     1,000       1,012  
Boyd Gaming Corp. 7.75% 2012
     620       577  
Boyd Gaming Corp. 6.75% 2014
     3,025       2,496  
Boyd Gaming Corp. 7.125% 2016
     1,175       952  
CIT Group Inc. 7.625% 2012
     1,500       1,248  
CIT Group Inc. 5.65% 2017
     3,567       2,771  
SunGard Data Systems Inc. 3.75% 2009
     2,500       2,456  
SunGard Data Systems Inc. 9.125% 2013
     1,500       1,523  
General Motors Acceptance Corp. 6.875% 2011
     1,500       1,149  
General Motors Acceptance Corp. 6.875% 2012
     1,000       761  
Residential Capital Corp. 8.50% 20134
     1,600       784  
General Motors Acceptance Corp. 6.75% 2014
     1,745       1,236  
Sunoco, Inc. 5.75% 2017
     3,900       3,859  
US Investigations Services, Inc. 10.50% 20155
     1,900       1,558  
US Investigations Services, Inc., Term Loan B, 5.599% 20153,4,7
     1,746       1,497  
US Investigations Services, Inc. 11.75% 20165
     1,035       776  
Centennial Communications Corp. 10.479% 20134
     710       621  
Centennial Communications Corp. 10.00% 2013
     2,250       2,104  
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013
     840       834  
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
                
Centennial Puerto Rico Operations Corp. 8.125% 20144
     250       238  
Residential Funding Mortgage Securities II, Inc., Series 2007-HSA2, Class A-1F, MBIA insured, 8.47% 20373,4
     3,880       3,791  
Sumitomo Mitsui Banking Corp. 5.625% (undated)4,5
     4,470       3,786  
ACE INA Holdings Inc. 5.875% 2014
     1,510       1,562  
ACE INA Holdings Inc. 5.80% 2018
     2,200       2,201  
SLM Corp., Series A, 5.40% 2011
     1,250       1,010  
SLM Corp., Series A, 5.45% 2011
     2,000       1,609  
SLM Corp., Series A, 5.00% 20152
     1,500       1,118  
Orascom Telecom 7.875% 20145
     3,980       3,711  
General Motors Corp. 7.125% 2013
     4,800       3,708  
Safeway Inc. 6.35% 2017
     3,500       3,706  
J.C. Penney Co., Inc. 8.00% 2010
     1,655       1,728  
J.C. Penney Corp., Inc. 5.75% 2018
     2,105       1,947  
Merrill Lynch & Co., Inc., Series C, 6.40% 2017
     3,675       3,633  
Rural Cellular Corp. 8.989% 20124
     350       352  
Rural Cellular Corp. 6.076% 20134
     3,250       3,266  
ERP Operating LP 6.584% 2015
     1,085       1,037  
ERP Operating LP 5.75% 2017
     660       602  
ERP Operating LP 7.125% 2017
     2,000       1,973  
BNP Paribas 7.195% (undated)4,5
     3,900       3,464  
Structured Asset Securities Corp., Series 2003-29, Class 1-A-1, 4.75% 20183
     3,461       3,357  
Structured Asset Securities Corp., Series 1998-RF2, Class A, 8.503% 20273,4,5
     86       86  
MBNA Credit Card Master Note Trust, Series 2004-1, Class B, 4.45% 20163
     4,250       3,428  
Enterprise Products Operating LP 6.50% 2019
     3,430       3,425  
SunTrust Banks, Inc.7.25% 2018
     3,330       3,412  
Allison Transmission Holdings, Inc. 11.25% 20155,6
     1,050       887  
Allison Transmission Holdings, Inc. 11.00% 20155
     2,875       2,516  
Wachovia Bank NA 6.60% 2038
     3,625       3,369  
Seneca Gaming Corp. 7.25% 2012
     1,300       1,232  
Seneca Gaming Corp., Series B, 7.25% 2012
     2,250       2,132  
Bank of America Corp. 5.75% 2017
     3,200       3,318  
Countrywide Alternative Loan Trust, Series 2006-16CB, Class A-2, 6.00% 20363
     1,565       1,447  
Countrywide Alternative Loan Trust, Series 2007-HY4, Class 4-A-1, 5.956% 20473,4
     1,792       1,254  
Countrywide Alternative Loan Trust, Series 2005-64CB, Class 1-A-7, 5.50% 20353
     623       607  
Schering-Plough Corp. 6.00% 2017
     3,275       3,297  
Delphi Corp. 6.50% 20139
     240       77  
CoBank ACB 3.40% 20224,5
     4,275       3,267  
Ceridian Corp. 11.25% 20155
     3,800       3,259  
LUKOIL International Finance BV 6.356% 2017
     3,300       3,077  
LUKOIL International Finance BV 6.656% 20225
     200       176  
ARAMARK Corp., Term Loan B, 4.571% 20143,4,7
     912       853  
ARAMARK Corp., Term Loan B, Letter of Credit, 4.571% 20143,4,7
     58       54  
ARAMARK Corp. 8.50% 2015
     2,300       2,317  
Union Pacific Corp. 5.70% 2018
     3,200       3,188  
Simon Property Group, LP 6.35% 2012
     1,300       1,324  
Simon Property Group, LP 5.875% 2017
     1,850       1,756  
CWHEQ Home Equity Loan Trust, Series 2007-S1, Class A-6, MBIA insured, 5.693% 20363,4
     4,000       3,075  
AES Corp. 8.75% 20135
     780       815  
AES Corp. 7.75% 2015
     2,200       2,228  
Hanesbrands Inc., Series B, 8.204% 20144
     3,405       3,039  
JBS SA 10.50% 2016
     3,125       3,023  
PNC Funding Corp., Series I, 6.517% (undated)2,4,5
     1,600       1,080  
PNC Funding Corp., Series II, 6.113% (undated)2,4,5
     3,100       1,938  
Quebecor Media Inc. 7.75% 2016
     2,250       2,064  
Quebecor Media Inc. 7.75% 2016
     1,000       918  
Petroplus Finance Ltd. 6.75% 20145
     1,425       1,307  
Petroplus Finance Ltd. 7.00% 20175
     1,850       1,660  
Triad Automobile Receivables Trust, Series 2007-A, Class A-3, FSA insured, 5.28% 20123
     2,890       2,930  
Sanmina-SCI Corp. 8.125% 2016
     3,260       2,901  
Nalco Co. 7.75% 2011
     1,475       1,501  
Nalco Co. 8.875% 2013
     875       903  
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 0%/9.00% 20148
     475       430  
Delhaize Group 6.50% 2017
     1,500       1,552  
Delhaize America, Inc. 9.00% 2031
     1,000       1,207  
Toys “R” Us, Inc. 7.625% 2011
     3,340       2,730  
Federated Retail Holdings, Inc. 5.90% 2016
     3,065       2,729  
Stater Bros. Holdings Inc. 8.125% 2012
     1,460       1,471  
Stater Bros. Holdings Inc. 7.75% 2015
     1,300       1,235  
Tenneco Automotive Inc. 8.625% 2014
     2,740       2,706  
PTS Acquisition Corp. 9.50% 20155,6
     3,290       2,681  
NRG Energy, Inc. 7.25% 2014
     2,665       2,638  
Aries Vermögensverwaltungs GmbH, Series C, 9.60% 2014
     2,000       2,633  
American Media Operations, Inc., Series B, 10.25% 20095
     103       69  
American Media Operations, Inc., Series B, 10.25% 2009
     3,330       2,248  
American Media Operations, Inc. 8.875% 20115
     14       9  
American Media Operations, Inc. 8.875% 2011
     380       253  
AMC Entertainment Inc. 8.00% 2014
     525       448  
AMC Entertainment Inc., Series B, 11.00% 2016
     2,250       2,118  
Celestica Inc. 7.875% 2011
     1,605       1,585  
Celestica Inc. 7.625% 2013
     1,020       969  
Koninklijke Philips Electronics NV 5.75% 2018
     2,500       2,552  
Jamaican Government 9.00% 2015
     280       305  
Jamaican Government 9.25% 2025
     2,000       2,230  
HealthSouth Corp. 10.75% 2016
     2,400       2,532  
United Mexican States Government Global 6.375% 2013
     1,826       2,010  
United Mexican States Government Global 6.05% 2040
     520       521  
Lafarge 6.15% 2011
     2,450       2,501  
Hughes Communications, Inc. 9.50% 2014
     2,500       2,500  
Husky Energy Inc. 6.80% 2037
     2,425       2,472  
Radio One, Inc., Series B, 8.875% 2011
     1,200       969  
Radio One, Inc. 6.375% 2013
     2,060       1,494  
Triton PCS, Inc. 8.50% 2013
     2,350       2,459  
Cablevision Systems Corp., Series B, 8.00% 2012
     2,470       2,414  
HCA Inc., Term Loan B, 4.946% 20133,4,7
     1,554       1,433  
HCA Inc. 9.625% 20166
     925       962  
Kazkommerts International BV 8.50% 2013
     1,750       1,548  
Kazkommerts International BV 7.875% 20145
     500       415  
Kazkommerts International BV 7.875% 2014
     500       415  
ZFS Finance (USA) Trust V 6.50% 20674,5
     2,550       2,305  
CNA Financial Corp. 6.50% 2016
     2,270       2,298  
Kansas City Southern Railway Co. 7.50% 2009
     2,250       2,295  
Developers Diversified Realty Corp. 5.375% 2012
     2,450       2,290  
PETRONAS Capital Ltd. 7.00% 20125
     2,050       2,282  
DRS Technologies, Inc. 6.875% 2013
     1,815       1,788  
DRS Technologies, Inc. 6.625% 2016
     225       221  
DRS Technologies, Inc. 7.625% 2018
     250       251  
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 4.375% 20105
     360       353  
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20145
     700       639  
Westfield Group 5.70% 20165
     1,385       1,254  
American Express Co. 8.15% 2038
     2,000       2,223  
Realogy Corp., Term Loan B, 7.505% 20133,4,7
     215       173  
Realogy Corp., Term Loan, Letter of Credit, 8.24% 20133,4,7
     58       47  
Realogy Corp. 10.50% 2014
     2,275       1,541  
Realogy Corp. 11.00% 20146
     775       446  
Albertson's, Inc. 8.00% 2031
     2,300       2,204  
AXA SA 6.379% (undated)4,5
     2,725       2,203  
Allied Waste North America, Inc., Series B, 5.75% 2011
     650       639  
Allied Waste North America, Inc., Series B, 6.125% 2014
     275       267  
Allied Waste North America, Inc., Series B, 7.375% 2014
     1,280       1,266  
Hawker Beechcraft Acquisition Co., LLC 8.875% 20156
     1,730       1,778  
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015
     225       232  
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017
     150       150  
Viacom Inc. 6.25% 2016
     1,500       1,462  
Viacom Inc. 6.875% 2036
     700       676  
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014
     2,130       2,135  
E*TRADE Financial Corp. 8.00% 2011
     1,925       1,617  
E*TRADE Financial Corp. 7.875% 2015
     680       486  
Lincoln National Corp. 7.00% 20664
     2,290       2,103  
Pinnacle Entertainment, Inc. 7.50% 20155
     2,650       2,100  
El Salvador (Republic of) 7.65% 20355
     1,970       2,098  
CenterPoint Energy Transition Bond Company III, LLC, Series 2008, Class A-2, 5.234% 20233
     2,225       2,094  
Drummond Co., Inc. 7.375% 20165
     2,275       2,093  
ISA Capital do Brasil SA 8.80% 20175
     2,000       2,090  
Citibank Credit Card Issuance Trust, Class 2004-A7, 3.183% 20133,4
     2,100       2,029  
AES Panamá, SA 6.35% 20165
     2,000       2,002  
Capmark Financial Group, Inc. 5.875% 20125
     2,500       1,585  
Capmark Financial Group, Inc. 6.30% 20175
     690       414  
DAE Aviation Holdings, Inc. 11.25% 20155
     1,990       1,970  
Ashtead Group PLC 8.625% 20155
     1,915       1,542  
Ashtead Capital, Inc. 9.00% 20165
     525       428  
Chohung Bank 4.50% 20142,4,5
     2,000       1,963  
Metals USA Holdings Corp. 10.729% 20124,6
     1,100       825  
Metals USA, Inc. 11.125% 2015
     1,150       1,133  
Wachovia Bank Commercial Mortgage Trust, Series 2005-C16, Class A-PB, 4.692% 20413
     2,000       1,913  
Banque Centrale de Tunisie 7.375% 2012
     1,750       1,899  
VWR Funding, Inc. 10.25% 20154,6
     2,025       1,893  
Fifth Third Capital Trust IV 6.50% 20672,4
     2,720       1,890  
Gaylord Entertainment Co. 8.00% 2013
     2,025       1,888  
THL Buildco, Inc. 8.50% 2014
     2,090       1,557  
NTK Holdings Inc. 0%/10.75% 20143,8
     650       319  
Citigroup Commercial Mortgage Trust, Series 2006-C4, Class A-M, 5.725% (undated)3,4
     2,000       1,870  
Brandywine Operating Partnership, LP 5.625% 2010
     1,000       933  
Brandywine Operating Partnership, LP 5.70% 2017
     1,150       935  
Southern Natural Gas Co. 5.90% 20175
     1,900       1,867  
Level 3 Financing, Inc. 9.25% 2014
     2,260       1,859  
NTL Cable PLC 8.75% 2014
     2,050       1,850  
Yankee Candle Co., Inc., Series B, 8.50% 2015
     1,200       975  
Yankee Candle Co., Inc., Series B, 9.75% 2017
     1,075       860  
Intelsat (Bermuda), Ltd. 8.25% 2013
     540       547  
Intelsat (Bermuda), Ltd. 8.625% 2015
     675       683  
Intelsat Corp. 9.00% 2016
     575       582  
TransDigm Inc. 7.75% 2014
     1,800       1,809  
TEPPCO Partners LP 7.00% 20674
     2,100       1,805  
Hewlett-Packard Co. 5.50% 2018
     1,750       1,796  
Serena Software, Inc. 10.375% 2016
     1,936       1,793  
Canadian Natural Resources Ltd. 5.70% 2017
     1,760       1,783  
Credit-Based Asset Servicing and Securitization LLC, Series 2007-CB4, Class A-2B, 5.723% 20373,4
     2,050       1,768  
Young Broadcasting Inc. 10.00% 2011
     2,695       1,705  
Bear Stearns ALT-A Trust, Series 2005-9, Class II-6A-1, 5.804% 20353,4
     2,423       1,696  
Hertz Corp. 10.50% 2016
     1,800       1,694  
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014
     1,895       1,689  
Allstate Corp., Series B, 6.125% 20674
     1,830       1,688  
Jefferson Smurfit Corp. (U.S.) 8.25% 2012
     1,265       1,146  
Stone Container Corp. 8.375% 2012
     205       187  
Jefferson Smurfit Corp. (U.S.) 7.50% 2013
     400       346  
Windstream Corp. 8.125% 2013
     1,400       1,383  
Windstream Corp. 8.625% 2016
     300       296  
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012
     1,375       1,410  
Sierra Pacific Resources 8.625% 2014
     250       264  
Nationwide Financial Services, Inc. 6.75% 20674
     1,970       1,644  
LBI Media, Inc. 8.50% 20175
     1,855       1,616  
Spirit Master Funding LLC, Net-Lease Mortgage Notes, Series 2005-1, Class A-1, AMBAC insured, 5.05% 20232,3,5
     1,979       1,611  
Coventry Health Care, Inc. 6.30% 2014
     1,600       1,609  
Gulfstream Natural Gas 6.19% 20255
     1,670       1,606  
Overseas Shipholding Group, Inc. 8.25% 2013
     1,550       1,564  
MGM MIRAGE 6.00% 2009
     350       349  
Mandalay Resort Group 6.375% 2011
     275       263  
MGM MIRAGE 6.75% 2013
     915       846  
MGM MIRAGE 6.625% 2015
     100       88  
Catlin Insurance Ltd. 7.249% (undated)4,5
     1,835       1,534  
Local T.V. Finance LLC 9.25% 20155,6
     1,895       1,528  
Glen Meadow Pass Through Trust 6.505% 20672,4,5
     1,910       1,503  
Northwest Airlines, Inc., Term Loan B, 6.20% 20133,4,7
     486       450  
Northwest Airlines, Inc., Term Loan A, 4.45% 20183,4,7
     1,179       1,043  
Education Management LLC and Education Management Finance Corp. 8.75% 2014
     725       616  
Education Management LLC and Education Management Finance Corp. 10.25% 2016
     1,070       856  
Colombia (Republic of) Global 10.375% 2033
     484       702  
Colombia (Republic of) Global 7.375% 2037
     715       769  
Merrill Lynch Mortgage Investors, Inc., Series 2006-RM1, Class A-2B, 5.45% 20373,4
     1,590       1,466  
Guatemala (Republic of) 10.25% 2011
     990       1,151  
Guatemala (Republic of) 9.25% 2013
     260       302  
New Century Home Equity Loan Trust, Series 2006-2, Class A-2-b, 2.759% 20363,4
     1,625       1,417  
TNK-BP Finance SA 7.50% 20165
     1,500       1,397  
Carrington Mortgage Loan Trust, Series 2006-NC5, Class A-5, 2.659% 20373,4
     1,517       1,395  
AEP Industries Inc. 7.875% 2013
     1,510       1,382  
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015
     1,615       1,365  
UPM-Kymmene Corp. 5.625% 20145
     1,590       1,361  
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20123
     129       128  
United Air Lines, Inc., Series 2001-1, Class A-1, 6.071% 20143
     127       127  
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20242,3
     1,177       1,089  
K. Hovnanian Enterprises, Inc. 6.00% 2010
     1,000       655  
K. Hovnanian Enterprises, Inc. 8.875% 2012
     910       510  
K. Hovnanian Enterprises, Inc. 6.50% 2014
     200       136  
Old Dominion Electric Cooperative, Series 2003-A, 5.676% 20283
     1,312       1,284  
Neiman Marcus Group, Inc. 9.00% 20156
     1,275       1,281  
DynCorp International and DIV Capital Corp., Series A, 9.50% 2013
     1,245       1,273  
BAE SYSTEMS 2001 Asset Trust, Series 2001, Class B, 7.156% 20113,5
     1,154       1,243  
Morgan Stanley Capital I Trust, Series 2005-HQ7, Class A-2, 5.223% 20423,4
     1,250       1,229  
Morris Publishing Group, LLC and Morris Publishing Finance Co., Series B, 7.00% 2013
     2,125       1,222  
Berry Plastics Holding Corp. 10.25% 2016
     1,575       1,221  
Georgia-Pacific Corp. 8.125% 2011
     500       499  
Georgia-Pacific Corp. 9.50% 2011
     705       721  
Sensata Technologies BV 8.00% 20144
     1,370       1,212  
Mylan Inc., Term Loan B, 6.25% 20143,4,7
     1,247       1,208  
Idearc Inc. 8.00% 2016
     1,845       1,204  
Iron Mountain Inc. 6.625% 2016
     1,250       1,197  
Accuride Corp. 8.50% 2015
     1,445       1,185  
GE Capital Commercial Mortgage Corp., Series 2001-3, Class A-2, 6.07% 20383
     1,000       1,016  
GE Capital Commercial Mortgage Corp., Series 2001-1, Class A-1, 6.079% 20333
     158       160  
BCAP LLC Trust, Series 2006-AA2, Class A-1, 2.769% 20373,4
     1,642       1,159  
Cooper-Standard Automotive Inc. 7.00% 2012
     250       216  
Cooper-Standard Automotive Inc. 8.375% 2014
     1,225       934  
Surgical Care Affiliates, Inc. 8.875% 20155,6
     800       620  
Surgical Care Affiliates, Inc. 10.00% 20175
     700       529  
Securitized Asset-backed Receivables LLC Trust, Series 2006-HE2, Class A-2C, 2.749% 20363,4
     1,750       1,145  
CarMax Auto Owner Trust, Series 2007-2, Class A-3, 5.23% 20113
     1,125       1,116  
Hawaiian Telcom Communications, Inc. 9.75% 2013
     1,060       578  
Hawaiian Telcom Communications, Inc. 10.318% 20134
     90       47  
Hawaiian Telcom Communications, Inc., Term Loan C, 4.946% 20143,4,7
     423       324  
Hawaiian Telcom Communications, Inc., Series B, 12.50% 2015
     450       164  
American Home Mortgage Assets Trust, Series 2007-3, Class II-2A-1, 6.25% 20373,4
     1,446       1,084  
Chubb Corp. 6.375% 20374
     1,160       1,082  
Warner Music Group 7.375% 2014
     1,390       1,077  
Lazard Group LLC 7.125% 2015
     700       682  
Lazard Group LLC 6.85% 2017
     400       375  
Smithfield Foods, Inc. 7.75% 2017
     1,075       1,054  
Boise Cascade, LLC and Boise Cascade Finance Corp. 7.125% 2014
     1,095       1,027  
Toll Brothers Finance Corp. 5.95% 2013
     175       168  
Toll Brothers, Inc. 4.95% 2014
     820       752  
Toll Brothers, Inc. 5.15% 2015
     110       100  
Federal Agricultural Mortgage Corp. 4.25% 2008
     1,000       1,007  
Verizon Communications Inc. 5.50% 2017
     1,000       987  
Newfield Exploration Co. 6.625% 2016
     1,000       985  
Citigroup-Deutsche Bank Commercial Mortgage Trust, Series 2006-CD3, Class A-5, 5.617% 20483
     1,000       979  
Goodyear Tire & Rubber Co. 8.625% 2011
     906       955  
Litigation Settlement Monetized Fee Trust I, Series 2001-1, Class A-2 10.98% 20312,3,5
     1,000       950  
GE Commercial Mortgage Corp., Series 2006-C1, Class A-4, 5.338% 20443,4
     1,000       943  
iStar Financial, Inc. 5.85% 2017
     1,350       933  
Alion Science and Technology Corp. 10.25% 2015
     1,630       929  
TRW Automotive Inc. 7.00% 20145
     1,000       928  
MetroPCS Wireless, Inc. 9.25% 2014
     1,000       925  
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20362,3,5
     850       743  
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20362,3,5
     200       171  
Irwin Home Equity, Series 2006-P1, Class 2-A4, AMBAC insured, 5.80% 20373,4,5
     1,000       910  
William Lyon Homes, Inc. 10.75% 2013
     1,300       683  
William Lyon Homes, Inc. 7.50% 2014
     450       223  
Kimco Realty Corp., Series C, 5.783% 2016
     550       524  
Kimco Realty Corp. 5.70% 2017
     415       378  
Building Materials Corp. of America 7.75% 2014
     1,205       874  
SBA CMBS Trust, Series 2005-1, Class B, 5.565% 20352,3,5
     475       463  
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20362,3,5
     105       95  
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20362,3,5
     105       95  
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20362,3,5
     105       95  
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20362,3,5
     105       95  
Tyson Foods, Inc. 6.85% 20164
     835       840  
France Télécom 7.75% 20114
     730       792  
Burlington Coat Factory Warehouse Corp. 11.125% 2014
     985       766  
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012
     750       759  
Marriott International, Inc., Series J, 5.625% 2013
     785       759  
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014
     780       755  
Georgia Gulf Corp. 9.50% 2014
     965       750  
Vitamin Shoppe Industries Inc. 10.565% 20122,4
     750       750  
Elizabeth Arden, Inc. 7.75% 2014
     770       735  
Duane Reade Inc. 9.75% 2011
     855       718  
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20133
     550       551  
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20193
     192       158  
Standard Pacific Corp. 5.125% 2009
     775       678  
Standard Pacific Corp. 6.25% 2014
     25       18  
Hertz Vehicle Financing LLC, Rental Car Asset-backed Notes, Series 2005-2, Class A-6, AMBAC insured, 5.08% 20113,5
     750       691  
Plastipak Holdings, Inc. 8.50% 20155
     750       686  
QBE Capital Funding II LP 6.797% (undated)4,5
     750       681  
Cinemark, Inc. 0%/9.75% 20148
     750       679  
D.R. Horton, Inc. 6.50% 2016
     750       671  
WDAC Intermediate Corp. 8.375% 20142,5
     850       663  
Team Finance LLC and Health Finance Corp. 11.25% 2013
     655       632  
Cox Communications, Inc. 4.625% 2010
     625       626  
Foundation PA Coal Co. 7.25% 2014
     625       622  
Dole Food Co., Inc. 7.25% 2010
     250       194  
Dole Food Co., Inc. 8.875% 2011
     505       412  
Banc of America Funding Trust, Series 2005-H, Class 9-A-1, 5.938% 20352,3,4
     765       574  
Bear Stearns ARM Trust, Series 2005-10, Class A-3, 4.65% 20353,4
     625       572  
Carnival Corp. 6.15% 2008
     565       566  
Viant Holdings Inc. 10.125% 20175
     693       565  
Qwest Capital Funding, Inc. 7.25% 2011
     130       124  
Qwest Communications International Inc., Series B, 7.50% 2014
     250       236  
U S WEST Communications, Inc. 6.875% 2033
     250       201  
Liberty Media Corp. 8.25% 2030
     650       549  
Owens-Illinois, Inc. 7.35% 2008
     525       527  
Cricket Communications, Inc. 9.375% 2014
     525       500  
Atlas Copco AB 5.60% 20175
     500       500  
Host Marriott, LP, Series K, 7.125% 2013
     500       493  
Bank of America, NA and First Union National Bank Commercial Mortgage Trust, Series 2001-3, Class A-1, 4.89% 20373
     490       488  
Sealy Mattress Co. 8.25% 2014
     580       487  
Universal Hospital Services, Inc. 8.288% 20154
     540       483  
DaimlerChrysler Financial Services Americas LLC, First Lien Term Loan, 6.80% 20123,4,7
     129       108  
DaimlerChrysler Financial Services Americas LLC, Second Lien Term Loan, 9.30% 20133,4,7
     525       366  
Home Equity Mortgage Trust, Series 2006-2, Class 1A-1, 5.367% 20362,3,4
     385       250  
Home Equity Mortgage Trust, Series 2006-5, Class A-1, 5.50% 20372,3,4
     483       193  
Tower Ventures, LLC, Series 2006-1, Class F, 7.036% 20362,3,5
     460       418  
Regal Cinemas Corp., Series B, 9.375% 20122
     400       413  
Esterline Technologies Corp. 6.625% 2017
     400       402  
Meritage Homes Corp. 6.25% 2015
     525       396  
Residential Asset Securities Corp. Trust, Series 2001-KS3, Class A-I-6, 5.96% 20313
     391       390  
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017
     375       379  
United Rentals (North America), Inc. 7.75% 2013
     460       375  
Graphic Packaging International, Inc. 8.50% 2011
     350       346  
Rouse Co. 6.75% 20135
     375       325  
Rockwood Specialties Group, Inc. 7.50% 2014
     325       317  
Rite Aid Corp. 6.125% 20085
     325       316  
BNSF Funding Trust I 6.613% 20554
     335       305  
Ambac Financial Group, Inc. 6.15% 20874
     725       276  
RSC Holdings III, LLC, Second Lien Term Loan B, 8.15% 20133,4,7
     279       238  
ACIH, Inc. 11.50% 20125
     650       185  
MagnaChip Semiconductor SA and MagnaChip Semiconductor Finance Co. 8.00% 2014
     310       178  
Iraq (Republic of) 5.80% 20283,5
     250       177  
Carmike Cinemas, Inc., Delayed Draw, Term Loan, 6.49% 20123,4,7
     133       125  
Pemex Project Funding Master Trust 9.125% 2010
     110       123  
Twin Reefs Asset Trust (XLFA), Series B, 4.058% 20794,5
     900       91  
AMR HoldCo, Inc. and EmCare HoldCo, Inc. 10.00% 2015
     85       91  
Southern Capital Corp. Pass Through Trust, Series 2002-1, Class G, MBIA insured, 5.70% 20233,5
     65       71  
Chase Commercial Mortgage Securities Corp., Series 1998-1, Class A-2, 6.56% 20303
     71       71  
Stoneridge, Inc. 11.50% 2012
     25       26  
              2,280,743  
                 
                 
                 
Total bonds & notes (cost: $7,597,872,000)
             8,028,621  
                 
                 
                 
Warrants — 0.00%
  
Shares
          
                 
U.S. DOLLARS — 0.00%
                
GT Group Telecom Inc., warrants, expire 20102,5,10
     1,000       — *
                 
                 
Total warrants (cost: $52,000)
             — *
                 
                 
                 
Preferred securities — 2.20%
                
                 
EUROS — 1.44%
                
HVB Funding Trust VIII 7.055%4
     16,250,000       25,116  
UniCredito Italiano Capital Trust III 4.028%4
     1,000,000       1,238  
UniCredito Italiano Capital Trust I, Class B, 8.048%4
     8,000,000       13,008  
Commerzbank Capital Funding Trust I, Class B, 5.012% noncumulative4
     25,100,000       30,484  
Allied Irish Banks, PLC 4.781%4
     12,760,000       14,836  
Allied Irish Banks, PLC 7.50% perpetual reserve capital instruments4
     5,000,000       7,736  
Barclays Bank PLC 4.75%4
     12,530,000       12,397  
Standard Chartered Capital Trust I 8.16%4
     5,000,000       7,971  
MUFG Capital Finance 2 Ltd. 4.85% noncumulative4
     5,750,000       6,440  
Bank of Ireland UK Holdings PLC 7.40%4
     3,000,000       4,551  
SG Capital Trust I 7.875% noncumulative trust4
     1,000,000       1,595  
BNP Paribas Capital Trust IV 6.342%4
     500,000       771  
              126,143  
                 
                 
U.S. DOLLARS — 0.53%
                
MUFG Capital Finance 1 Ltd. 6.346% noncumulative4
     20,201,000       16,487  
DBS Capital Funding Corp., Series A, 7.657% noncumulative guaranteed preference shares4,5
     8,800,000       8,851  
Sumitomo Mitsui Banking Corp. 6.078%4,5
     6,130,000       4,837  
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative2,4,5
     7,085,000       4,641  
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative4,5
     200,000       201  
Mizuho Capital Investment (USD) 1 Ltd. 6.686% noncumulative2,4,5
     5,000,000       3,928  
Resona Preferred Global Securities (Cayman) Ltd. 7.191%2,4,5
     4,190,000       3,567  
Chuo Mitsui Trust and Banking Co., Ltd. 5.506%4,5
     2,000,000       1,673  
RBS Capital Trust IV 3.496% noncumulative trust4
     2,200,000       1,350  
XL Capital Ltd., Series E, 6.50%4
     1,665,000       1,250  
              46,785  
                 
                 
BRITISH POUNDS — 0.11%
                
Commerzbank Capital Funding Trust II, Class B, 5.905% noncumulative4
     4,500,000    
US$ 6,629
  
Sumitomo Mitsui Banking Corp. 6.164%4
     990,000       1,522  
BOI Capital Funding (No. 4) LP 6.43%4
     1,000,000       1,515  
              9,666  
                 
                 
MISCELLANEOUS — 0.12%
                
Other preferred securities in initial period of acquisition
             10,546  
                 
                 
Total preferred securities (cost: $203,606,000)
             193,140  
                 
                 
   
Principal amount
          
Short-term securities — 4.40%
     (000 )        
                 
General Electric Capital Corp. 2.50% due 4/1/2008
  
US$96,600
       96,593  
UBS Finance (Delaware) LLC 4.12% due 5/12/2008
     58,200       58,007  
Siemens Capital Co. LLC 2.15% due 5/14/20085
     41,500       41,391  
Bank of Ireland 4.33% due 4/9/20085
     28,500       28,478  
BMW U.S. Capital LLC 2.20% due 4/15–5/5/20085
     25,900       25,869  
Toronto-Dominion Holdings USA Inc. 2.54% due 4/14/20085
     25,000       24,975  
DaimlerChrysler Revolving Auto Conduit LLC 4.50% due 4/7/2008
     24,800       24,783  
Danske Corp. 4.475% due 4/7/20085
     24,200       24,186  
Fannie Mae 2.66% due 4/23/2008
     23,100       23,055  
Federal Farm Credit Banks 3.75% due 7/11/2008
     20,700       20,567  
KfW 2.33% due 4/4/20085
     19,300       19,295  
                 
Total short-term securities (cost: $387,008,000)
             387,199  
                 
                 
Total investment securities (cost: $8,188,538,000)
             8,608,960  
Other assets less liabilities
             179,104  
                 
Net assets
          
US$8,788,064
  


*Amount less than one thousand.

“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.

1
Index-linked bond whose principal amount moves with a government retail price index.
2
Valued under fair value procedures adopted by authority of the board of directors. The total value of all such securities was $805,786,000, which represented 9.17% of the net assets of the fund.
3
Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date.
4
Coupon rate may change periodically.
5
Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the United States in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $672,021,000, which represented 7.65% of the net assets of the fund.
6
Payment in kind; the issuer has the option of paying additional securities in lieu of cash.
7
Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $17,257,000, which represented .20% of the net assets of the fund.
8
Step bond; coupon rate will increase at a later date.
9
Scheduled interest and/or principal payment was not received.
10
Security did not produce income during the last 12 months.




Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
 
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.

 
 
 
 
MFGEFP-931-0508O-S10864
 
 
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.


ITEM 10 – Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of directors since the Registrant last submitted a proxy statement to its shareholders.  The procedures are as follows.  The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of directors. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.


ITEM 11 – Controls and Procedures

(a)
The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule.
   
(b)
There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.


ITEM 12 – Exhibits

(a)(1)
Not applicable for filing of semi-annual reports to shareholders.
   
(a)(2)
The certifications required by Rule 30a-2 of the Investment Company Act of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto.


 
 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
CAPITAL WORLD BOND FUND, INC.
   
 
By /s/ Mark H. Dalzell
 
Mark H. Dalzell, President and
Principal Executive Officer
   
 
Date: June 6, 2008



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


By /s/ Mark H. Dalzell
Mark H. Dalzell, President and
Principal Executive Officer
 
Date: June 6, 2008



By /s/ Sharon G. Moseley
Sharon G. Moseley, Treasurer and
Principal Financial Officer
 
Date: June 6, 2008